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What changed in CVS Health's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of CVS Health's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+552 added−689 removedSource: 10-K (2026-02-10) vs 10-K (2025-02-12)

Top changes in CVS Health's 2025 10-K

552 paragraphs added · 689 removed · 460 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

157 edited+38 added−80 removed305 unchanged
Biggest changeConsumers also need medication management programs and better information to help them get the most out of their health care dollars. To assist consumers with these needs, the Company has introduced integrated pharmacy health care services that provide an earlier, easier and more effective approach to engaging consumers in behaviors that can help lower costs, improve health and save lives.
Biggest changeTo assist consumers with these needs, the Company has introduced integrated pharmacy health care services that provide an earlier, easier and more effective approach to engaging consumers in behaviors that can help lower costs, improve health and save lives. 12 Front Store Front store revenues reflect the Company’s strategy of innovating with new and unique products and services, using innovative personalized marketing and adjusting the mix of merchandise to match customers’ needs and preferences.
It is also possible that Congress may consider changes to Medicare Advantage payment policies due to recent recommendations by the Medicare Payment Advisory Commission and to reduce the potential added cost burden of costly new benefits, or policies that impact drug pricing such as price controls and inflationary rebates applied to pharmaceutical manufacturers.
It is also possible that Congress may consider changes to Medicare Advantage payment policies due to recent recommendations by the Medicare Payment Advisory Commission and to reduce the potential added cost burden of costly new benefits, or policies that impact drug pricing such as price controls and drug price inflationary rebates applied to pharmaceutical manufacturers.
The Company also may be subject to significant fines, penalties, premium refunds and litigation if it fails to comply with minimum MLR laws and regulations.
The Company also may be subject to significant fines, penalties, premium refunds and litigation if it fails to comply with minimum MLR laws and regulations.
The Company can give no assurance that its businesses, financial condition, operating results and/or cash flows will not be materially adversely affected, or that the Company will not be required to materially change its business, practices or strategy, based on: (i) future enactment of new health care or other laws or regulations; (ii) the interpretation or application of existing laws or regulations, including the laws and regulations described in this Government Regulation section, as they may relate to one or more of the Company’s businesses, one or more of the industries in which the Company competes and/or the health care industry generally; (iii) pending or future federal or state governmental investigations of one or more of the Company’s businesses, one or more of the industries in which the Company competes and/or the health care industry generally; (iv) pending or future government audits, investigations or enforcement actions against the Company; or (v) adverse developments in pending or future legal proceedings against or affecting the Company, including qui tam lawsuits, or affecting one or more of the industries in which the Company competes and/or the health care industry generally.
The Company can give no assurance that its businesses, financial condition, operating results and/or cash flows will not be materially adversely affected, or that the Company will not be required to materially change its business, practices or strategy, based on: (i) future enactment of new health care or other laws or regulations; (ii) the interpretation or application of existing 17 laws or regulations, including the laws and regulations described in this Government Regulation section, as they may relate to one or more of the Company’s businesses, one or more of the industries in which the Company competes and/or the health care industry generally; (iii) pending or future federal or state governmental investigations of one or more of the Company’s businesses, one or more of the industries in which the Company competes and/or the health care industry generally; (iv) pending or future government audits, investigations or enforcement actions against the Company; or (v) adverse developments in pending or future legal proceedings against or affecting the Company, including qui tam lawsuits, or affecting one or more of the industries in which the Company competes and/or the health care industry generally.
Drug Enforcement Administration (the “DEA”) and analogous state agencies that regulate controlled substances; packaging, storing, shipping and tracking of pharmaceuticals; repackaging of drug products; labeling, medication guides and other consumer disclosures; interactions with prescribers and health care professionals; compounding of prescription medications; dispensing of controlled and non-controlled substances; counseling of 25 patients; transfers of prescriptions; advertisement of prescription products and pharmacy services; security; inventory control; recordkeeping; reporting to Boards of Pharmacy, the U.S.
Drug Enforcement Administration (the “DEA”) and analogous state agencies that regulate controlled substances; packaging, storing, shipping and tracking of pharmaceuticals; repackaging of drug products; labeling, medication guides and other consumer disclosures; interactions with prescribers and health care professionals; compounding of prescription medications; dispensing of controlled and non-controlled substances; counseling of patients; transfers of prescriptions; advertisement of prescription products and pharmacy services; security; inventory control; recordkeeping; reporting to Boards of Pharmacy, the U.S.
CMS may seek premium and other refunds, prohibit the Company from continuing to market and/or enroll members in or refuse to passively enroll members in one or more of the Company’s Medicare or dual eligible plans, exclude us from participating in one or more Medicare, dual eligible or dual eligible special needs plan programs and/or institute other sanctions and/or civil monetary penalties against the Company if it fails to comply with CMS regulations or its Medicare contractual requirements.
CMS may seek premium and other refunds, prohibit the Company from continuing to market and/or enroll members in or refuse to passively enroll members in one or more of the Company’s Medicare or dual eligible plans, exclude us from participating in one or more Medicare, dual eligible or dual eligible special needs plan programs 19 and/or institute other sanctions and/or civil monetary penalties against the Company if it fails to comply with CMS regulations or its Medicare contractual requirements.
In addition, differing approaches to state privacy, cybersecurity and/or artificial intelligence regulation and varying enforcement philosophies may significantly restrict the Company’s ability to standardize its products and services across state lines. Widely-reported large scale cyberattacks in the U.S. and abroad increase the likelihood that additional data security legislation will be considered by additional states or by the federal government.
In addition, differing approaches to state privacy, cybersecurity and/or artificial intelligence regulation and varying enforcement philosophies may significantly restrict the Company’s ability to standardize its products and services across state lines. Widely-reported large scale cyberattacks in the U.S. and abroad increase the likelihood that additional data security legislation will be 23 considered by additional states or by the federal government.
These programs include utilization management (“UM”), medication management, quality assurance, adherence and counseling programs to complement the client’s plan design and clinical strategies. The Company offers an integrated strategy that aims to help decrease the potential for inappropriate opioid use while preserving access for those with genuine chronic pain needs through concurrent and retrospective claims’ review.
These programs include utilization management (“UM”), medication management, quality assurance, adherence and counseling programs to complement the client’s plan design and clinical strategies. The Company offers an integrated strategy that aims to help decrease the potential for inappropriate opioid use while preserving access for those with genuine chronic pain needs through concurrent and 8 retrospective claims’ review.
The Company also assists PBM clients in monitoring the effectiveness of their plans through frequent, informal communications, the use of proprietary software, as well as through formal annual, quarterly and sometimes monthly performance reviews. The Company administers pharmacy benefit plans for clients who contract with it to facilitate prescription drug coverage and claims processing for their eligible plan members.
The Company also assists PBM clients in monitoring the effectiveness of their plans through frequent, informal communications, the use of proprietary software, as well as through formal annual, quarterly and sometimes monthly performance reviews. The Company administers pharmacy benefit plans for clients who contract with it to facilitate 7 prescription drug coverage and claims processing for their eligible plan members.
Environmental and Safety Regulation - The Company’s businesses are subject to various federal, state and local laws, regulations and other requirements pertaining to protection of the environment, public health and employee safety, including, for example, regulations governing the management of hazardous substances, the cleaning up of contaminated sites, and the maintenance of safe working conditions in the Company’s retail locations, distribution centers and other facilities.
Environmental and Safety Regulation - The Company’s businesses are subject to various federal, state and local laws, regulations and other requirements pertaining to protection of the environment, public health and employee safety, including, 25 for example, regulations governing the management of hazardous substances, the cleaning up of contaminated sites, and the maintenance of safe working conditions in the Company’s retail locations, distribution centers and other facilities.
Emerging competitors include start up health care benefits plans, provider-owned health plans, new joint ventures (including not-for-profit joint ventures among firms from multiple industries), financial services firms that are distributing competing products on their proprietary Private Exchanges, and consulting firms that are distributing competing products on their proprietary Private Exchanges, as well as non-traditional distributors such as retail companies.
Emerging competitors include start up health care benefits plans, provider-owned health 6 plans, new joint ventures (including not-for-profit joint ventures among firms from multiple industries), financial services firms that are distributing competing products on their proprietary Private Exchanges, and consulting firms that are distributing competing products on their proprietary Private Exchanges, as well as non-traditional distributors such as retail companies.
The rating system considers a variety of measures adopted by CMS, including quality of preventative services, chronic illness management and overall customer satisfaction. See “Health Care Benefits Pricing” below in this Item 1 for further discussion of star ratings. The 3 Company seeks Health Plan accreditation for Aetna Inc.
The rating system considers a variety of measures adopted by CMS, including quality of preventative services, chronic illness management and overall customer satisfaction. See “Health Care Benefits Pricing” below in this Item 1 for further discussion of star ratings. The Company seeks Health Plan accreditation for Aetna Inc.
We focus on identifying causes and improving performance when workplace incidents occur. We capture colleague observations and feedback through programs like our Behavior Based Safety and our Safety 16 Hazard and Awareness Reporting Program. We also engage leaders in promoting a culture of safety and measure performance through a comprehensive safety index that leverages both leading and lagging indicators.
We focus on identifying causes and improving performance when workplace incidents occur. We capture colleague observations and feedback through programs like our Behavior Based Safety and our Safety Hazard and Awareness Reporting Program. We also engage leaders in promoting a culture of safety and measure performance through a comprehensive safety index that leverages both leading and lagging indicators.
A number of states have similar laws, some of which are not limited to services paid for with government funds. Sanctions for violating these federal and state anti-remuneration laws may include 23 imprisonment, criminal and civil fines, and exclusion from participation in Medicare, Medicaid and other federal and state government-sponsored health care programs.
A number of states have similar laws, some of which are not limited to services paid for with government funds. Sanctions for violating these federal and state anti-remuneration laws may include imprisonment, criminal and civil fines, and exclusion from participation in Medicare, Medicaid and other federal and state government-sponsored health care programs.
In some 31 states, these laws and regulations restrict the Company’s ability to price for the risk it assumes and/or reflect reasonable costs in the Company’s pricing. The ACA expanded the premium rate review process by, among other things, requiring the Company’s Commercial Insured rates to be reviewed for “reasonableness” at either the state or the federal level.
In some states, these laws and regulations restrict the Company’s ability to price for the risk it assumes and/or reflect reasonable costs in the Company’s pricing. The ACA expanded the premium rate review process by, among other things, requiring the Company’s Commercial Insured rates to be reviewed for “reasonableness” at either the state or the federal level.
MAC methodology is a common cost management practice used by 33 private and public payors (including CMS) to pay pharmacies for dispensing generic prescription drugs. MAC prices specify the allowable reimbursement by a PBM for a particular strength and dosage of a generic drug that is available from multiple manufacturers but sold at different prices.
MAC methodology is a common cost management practice used by private and public payors (including CMS) to pay pharmacies for dispensing generic prescription drugs. MAC prices specify the allowable reimbursement by a PBM for a particular strength and dosage of a generic drug that is available from multiple manufacturers but sold at different prices.
The rule requires group health plans and health insurance issuers in the individual and group markets to disclose cost-sharing information upon request, to a participant, beneficiary, or enrollee and require plans and issuers to publicly disclose in-network provider rates, historical out-of-network allowed amounts and the associated billed charges, and negotiated rates and historical net prices for prescription drugs.
The rule also requires group health plans and health insurance issuers in the individual and group markets to disclose cost-sharing information upon request, to a participant, beneficiary, or enrollee and require plans and issuers to publicly disclose in-network provider rates, historical out-of-network allowed amounts and the associated billed charges, and negotiated rates and historical net prices for prescription drugs.
Pharmacy and Professional Licensure and Regulation - The Company is subject to a variety of intersecting federal and state statutes and regulations that govern the wholesale distribution of drugs; operation of retail, specialty, infusion, LTC and mail order pharmacies; licensure of facilities and professionals, including pharmacists, technicians, nurses and other health care professionals; registration of facilities with the U.S.
Pharmacy and Professional Licensure and Regulation - The Company is subject to a variety of intersecting federal and state statutes and regulations that govern the wholesale distribution of drugs; operation of retail, specialty, infusion and mail order pharmacies; licensure of facilities and professionals, including pharmacists, technicians, nurses and other health care professionals; registration of facilities with the U.S.
Many states regulate the scope of prescription drug coverage, as well as the delivery channels to receive prescriptions, for insurers, MCOs and Medicaid managed care plans. The increasing government regulation of formularies could significantly affect the Company’s ability to develop and administer formularies, pharmacy networks and other plan design features.
Many states regulate the scope of prescription drug coverage, as well as the delivery channels to receive prescriptions, for insurers, MCOs and Medicaid managed care plans. The increasing government regulation of formularies could significantly affect the Company’s ability to 30 develop and administer formularies, pharmacy networks and other plan design features.
These services are managed through our new innovative specialty workflow and web platform. 10 The Health Services segment’s custom-built proprietary Canopy technology is a key driver of the success of its value-based care model and foundation for patients receiving a consistent, high-quality level of care.
These services are managed through our new innovative specialty workflow and web platform. The Health Services segment’s custom-built proprietary Canopy technology is a key driver of the success of its value-based care model and foundation for patients receiving a consistent, high-quality level of care.
The Company also has a contractual arrangement with carriers for the FEHB program, such as the BlueCross BlueShield Association, to provide pharmacy services to federal employees, postal workers, annuitants, and their dependents under the Government-wide Service Benefit Plan, as authorized by the FEHB Act and as part of the FEHB program.
The Company also has a contractual arrangement with carriers for the FEHB program, such as the 26 BlueCross BlueShield Association, to provide pharmacy services to federal employees, postal workers, annuitants, and their dependents under the Government-wide Service Benefit Plan, as authorized by the FEHB Act and as part of the FEHB program.
(“Aetna”) HMO plans from the National Committee for Quality Assurance (“NCQA”), a private, not-for-profit organization that evaluates, accredits and certifies a wide range of health care organizations. Health care plans seeking accreditation must pass a rigorous, comprehensive review and must annually report on their performance.
(“Aetna”) HMO plans from the National Committee for Quality 3 Assurance (“NCQA”), a private, not-for-profit organization that evaluates, accredits and certifies a wide range of health care organizations. Health care plans seeking accreditation must pass a rigorous, comprehensive review and must annually report on their performance.
The Company cannot predict whether pending or future federal or state legislation or court proceedings will change various aspects of the Medicaid program, nor can it predict the impact those changes will have on its business operations or operating results, but the effects could be materially adverse.
The Company cannot predict whether pending or future federal or state legislation or court proceedings will change various aspects of the Medicaid program, nor can it predict the impact those changes will have on its business operations or operating results, but the effects could be materially adverse to the Company.
Pharmacy & Consumer Wellness Products and Services A typical retail store sells prescription drugs and a wide assortment of high-quality, nationally advertised brand name and proprietary brand merchandise. Pharmacy locations may also contract with Covered Entities under the federal 340B drug 12 pricing program.
Pharmacy & Consumer Wellness Products and Services A typical retail store sells prescription drugs and a wide assortment of high-quality, nationally advertised brand name and proprietary brand merchandise. Pharmacy locations may also contract with Covered Entities under the federal 340B drug pricing program.
Each year we conduct engagement surveys that provide colleagues the opportunity to share opinions and experiences with respect to 15 their role, their team, and the enterprise to help CVS Health Corporation’s Board of Directors (the “Board”) and our management identify where we can improve colleague experience.
Each year we conduct engagement surveys that provide colleagues the opportunity to share opinions and experiences with respect to their role, their team, and the enterprise to help CVS Health Corporation’s Board of Directors (the “Board”) and our management identify where we can improve colleague experience.
Throughout the year, as IHEs are completed and the Company attempts to contact members, the number of members who have not received an IHE and whom 11 the Company is still able to contact declines, typically resulting in fewer IHEs scheduled during the fourth quarter of each calendar year.
Throughout the year, as IHEs are completed and the Company attempts to contact members, the number of members who have not received an IHE and whom the Company is still able to contact declines, typically resulting in fewer IHEs scheduled during the fourth quarter of each calendar year.
These programs are primarily designed to promote better health outcomes and to help target inappropriate medication utilization and non-adherence to medication, each of which may result in adverse medical events that 8 negatively affect member health and client pharmacy and medical spend.
These programs are primarily designed to promote better health outcomes and to help target inappropriate medication utilization and non-adherence to medication, each of which may result in adverse medical events that negatively affect member health and client pharmacy and medical spend.
Pharmacy & Consumer Wellness Competition 14 The retail pharmacy business is highly competitive. The Company believes that it competes principally on the basis of: (i) store location and convenience, (ii) customer service and satisfaction, (iii) product selection and variety, and (iv) price.
Pharmacy & Consumer Wellness Competition The retail pharmacy business is highly competitive. The Company believes that it competes principally on the basis of: (i) store location and convenience, (ii) customer service and satisfaction, (iii) product selection and variety, and (iv) price.
The Company has established systems for ensuring that its providers are appropriately licensed under applicable state law and that their provision of telehealth service to patients with whom we interact occurs in compliance with applicable laws and regulations.
The Company has established systems for ensuring that its providers are appropriately licensed under applicable state law and that their 24 provision of telehealth service to patients with whom we interact occurs in compliance with applicable laws and regulations.
The CVS Weight Management program optimizes utilization of GLP-1 medication and provides the label-recommended lifestyle support and coaching to maximize and maintain weight loss on these therapies, while addressing new indications (e.g., cardiovascular disease).
The CVS Weight Management TM program optimizes utilization of GLP-1 medication and provides the label-recommended lifestyle support and coaching to maximize and maintain weight loss on these therapies, while addressing new indications (e.g., cardiovascular disease).
Minimum MLR requirements and similar actions further limit the level of margin the Company can earn in its Insured Commercial products while leaving the Company exposed to medical costs that are higher than those reflected in its pricing.
Minimum MLR requirements and similar actions further limit the level of margin the Company can earn in its Insured Commercial products while leaving the Company exposed to medical costs that are higher than those 28 reflected in its pricing.
We disclose more information on our workforce strategy in our annual Impact Report. Total Rewards We strive to offer a comprehensive and competitive mix of pay and benefits to meet the varying needs of our colleagues and their families.
We disclose more information on our workforce strategy in our annual Impact Report. 15 Total Rewards We strive to offer a comprehensive and competitive mix of pay and benefits to meet the varying needs of our colleagues and their families.
The Company regards its intellectual property as having significant value in the Health Care Benefits, Health Services and Pharmacy & Consumer 17 Wellness segments. The Company is not aware of any facts that could materially impact the continuing use of any of its intellectual property.
The Company regards its intellectual property as having significant value in the Health Care Benefits, Health Services and Pharmacy & Consumer Wellness segments. The Company is not aware of any facts that could materially impact the continuing use of any of its intellectual property.
A legislative or regulatory change to the ability of Medicare Advantage plans to use home visits as a means to evaluate and diagnosis their members’ health conditions, or substantial changes in the risk adjustment mechanism, including changes that result from enforcement or audit actions, could: materially affect the amount of the Company’s Medicare reimbursement; require the Company to raise prices or reduce the benefits offered to Medicare beneficiaries; impact the services provided by, or the financial performance of, Oak Street Health and Signify Health; and potentially limit the Company’s (and the industry’s) participation in the Medicare program.
A legislative or regulatory change to the ability of Medicare Advantage plans to use home visits as a means to evaluate and diagnose their members’ health conditions, or substantial changes in the risk adjustment mechanism, including changes that result from enforcement or audit actions, could: materially affect the amount of the Company’s Medicare reimbursement; require the Company to raise prices or reduce the benefits offered to Medicare beneficiaries; impact the services provided by, or the financial performance of, Oak Street Health and Signify Health; and potentially limit the Company’s (and the industry’s) participation in the Medicare program.
State laws regulate the practice of medicine, the practice of pharmacy, the practice of nursing and certain other 29 clinical activities. Clinicians engaged in a professional practice in connection with the provision of clinical services must satisfy applicable state licensing requirements and must act within their scope of practice.
State laws regulate the practice of medicine, the practice of pharmacy, the practice of nursing and certain other clinical activities. Clinicians engaged in a professional practice in connection with the provision of clinical services must satisfy applicable state licensing requirements and must act within their scope of practice.
Plan Design Offerings and Administration 7 The Company assists its PBM clients in designing pharmacy benefit plans that help improve health outcomes while minimizing the costs to the client.
Plan Design Offerings and Administration The Company assists its PBM clients in designing pharmacy benefit plans that help improve health outcomes while minimizing the costs to the client.
This in turn could adversely affect the Company’s ability to continue to participate in certain product lines and/or geographies that it serves today. Although the U.S.
This in 18 turn could adversely affect the Company’s ability to continue to participate in certain product lines and/or geographies that it serves today. Although the U.S.
Such laws include the federal False Claims Act (the “False Claims Act”), the federal anti-kickback statute (the “AKS”), state 18 false claims acts and anti-kickback statutes in most states, the federal “Stark Law” and related state laws.
Such laws include the federal False Claims Act (the “False Claims Act”), the federal anti-kickback statute (the “AKS”), state false claims acts and anti-kickback statutes in most states, the federal “Stark Law” and related state laws.
The Health Services segment’s clients and customers are primarily employers, insurance companies, unions, government employee groups, health plans, PDPs, Medicaid managed care (“Managed Medicaid”) plans, CMS, plans offered on Insurance Exchanges and other sponsors of health benefit plans throughout the U.S., patients who receive care in the Health Services segment’s medical clinics, virtually or in the home, as well as Covered Entities.
The Health Services segment’s clients and customers are primarily employers, insurance companies, unions, government employee groups, health plans, PDPs, Medicaid managed care (“Managed Medicaid”) plans, CMS, plans offered on Private Exchanges and Public Exchanges and other sponsors of health benefit plans throughout the U.S., patients who receive care in the Health Services segment’s medical clinics, virtually or in the home, as well as Covered Entities.
In addition, the FDA regulates the Company’s activities as a distributor of store brand products. 30 Laws and Regulations Related to the Health Care Benefits Segment In addition to the laws and regulations discussed above that may affect multiple segments of the Company’s business, the Company is subject to federal, state, local and international statutes and regulations, as well as government program contracts, governing its Health Care Benefits segment specifically.
In addition, the FDA regulates the Company’s activities as a distributor of store brand products. 27 Laws and Regulations Related to the Health Care Benefits Segment In addition to the laws and regulations discussed above that may affect multiple segments of the Company’s business, the Company is subject to federal, state, local and international statutes and regulations, as well as government program contracts, governing its Health Care Benefits segment specifically.
The Company’s primary care operations rely on its value-based capitated partnerships with payors and CMS which manage and market Medicare Advantage plans across the U.S. The Company had strategic value-based relationships with over 25 different payors as of December 31, 2024, including each of the top 5 national payors by number of Medicare Advantage patients.
The Company’s primary care operations rely on its value-based capitated partnerships with payors and CMS which manage and market Medicare Advantage plans across the U.S. The Company had strategic value-based relationships with over 25 different payors as of December 31, 2025, including each of the top 5 national payors by number of Medicare Advantage patients.
Substantially all of the Pharmacy & Consumer Wellness segment’s pharmacy revenues are derived from pharmacy benefit managers, managed care organizations (“MCOs”), government funded health care programs, commercial employers and other third-party payors. No single Pharmacy & Consumer Wellness payor accounted for 10% or more of the Company’s consolidated total revenues in 2024, 2023 or 2022.
Substantially all of the Pharmacy & Consumer Wellness segment’s pharmacy revenues are derived from pharmacy benefit managers, managed care organizations (“MCOs”), government funded health care programs, commercial employers and other third-party payors. No single Pharmacy & Consumer Wellness payor accounted for 10% or more of the Company’s consolidated total revenues in 2025, 2024 or 2023.
Members typically receive coverage for certain prescription drugs, usually subject to a deductible, co-insurance and/or co-payment. The Company offered PDP plans in all 50 states and Washington, D.C. in 2024. • Medicare Supplement: For certain Medicare eligible members, the Company offers supplemental coverage for certain health care costs not covered by Original Medicare.
Members typically receive coverage for certain prescription drugs, usually subject to a deductible, co-insurance and/or co-payment. The Company offered PDP plans in all 50 states and Washington, D.C. in 2025. • Medicare Supplement: For certain Medicare eligible members, the Company offers supplemental coverage for certain health care costs not covered by Original Medicare.
The Company’s Oak Street Health business operates retail-like, community-based centers that provide medical primary care services and support Medicare eligible patients in the management of chronic illnesses and the prevention of unnecessary acute events. The Company integrates population health analytics, social support services and primary care into the care model to drive improved patient outcomes.
Oak Street Health operates retail-like, community-based centers that provide medical primary care services and support Medicare eligible patients in the management of chronic illnesses and the prevention of unnecessary acute events. The Company integrates population health analytics, social support services and primary care into the care model to drive improved patient outcomes.
In general, under these laws, an insurance company or HMO must submit a report of its RBC level to the insurance department or insurance commissioner of its state of domicile for each calendar year. At December 31, 2024, all of the Company’s insurance and HMO subsidiaries were above the RBC level that would require regulatory action.
In general, under these laws, an insurance company or HMO must submit a report of its RBC level to the insurance department or insurance commissioner of its state of domicile for each calendar year. At December 31, 2025, all of the Company’s insurance and HMO subsidiaries were above the RBC level that would require regulatory action.
The Company offered a wide selection of Medicare Supplement products in 49 states and Washington, D.C. in 2024. • Medicaid and CHIP: The Company offers health care management services to individuals eligible for Medicaid and CHIP under multi-year contracts with government agencies in various states that are subject to annual appropriations.
The Company offered a wide selection of Medicare Supplement products in 49 states and Washington, D.C. in 2025. • Medicaid and CHIP: The Company offers health care management services to individuals eligible for Medicaid and CHIP under multi-year contracts with government agencies in various states that are subject to annual appropriations.
Aetna Life Insurance Company (“ALIC”), a wholly-owned subsidiary of the Company, has received nationwide NCQA PPO Health Plan accreditation. As of December 31, 2024, all of the Company’s Commercial HMO and all of ALIC’s PPO members who were eligible participated in HMOs or PPOs that are accredited by the NCQA.
Aetna Life Insurance Company (“ALIC”), a wholly-owned subsidiary of the Company, has received nationwide NCQA PPO Health Plan accreditation. As of December 31, 2025, all of the Company’s Commercial HMO and all of ALIC’s PPO members who were eligible participated in HMOs or PPOs that are accredited by the NCQA.
During the year ended December 31, 2024, the Company’s PBM filled or managed 1.9 billion prescriptions on a 30-day equivalent basis. Health Services Products and Services PBM Solutions The Health Services segment manages prescription drug distribution directly through the Company’s specialty and mail order pharmacies and through pharmacies in its retail network.
During the year ended December 31, 2025, the Company’s PBM filled or managed 1.9 billion prescriptions on a 30-day equivalent basis. Health Services Products and Services PBM Solutions The Health Services segment manages prescription drug distribution directly through the Company’s specialty and mail order pharmacies and through pharmacies in its retail network.
We serve an estimated more than 36 million people through traditional, voluntary and consumer-directed health insurance products and related services, including expanding Medicare Advantage offerings and a leading standalone Medicare Part D prescription drug plan (“PDP”).
We serve an estimated more than 37 million people through traditional, voluntary and consumer-directed health insurance products and related services, including expanding Medicare Advantage offerings and a leading standalone Medicare Part D prescription drug plan (“PDP”).
Government Agreements and Mandates - From time to time, the Company and/or its various affiliates are subject to certain consent decrees, settlement and other agreements, corrective action plans and corporate integrity agreements with various federal, state and local authorities relating to such matters as privacy practices, controlled substances, PDPs, expired products, environmental and safety matters, marketing and advertising practices, PBM, LTC and other pharmacy operations and various other business practices.
Government Agreements and Mandates - From time to time, the Company and/or its various affiliates are subject to certain consent decrees, settlement and other agreements, corrective action plans and corporate integrity agreements or heightened scrutiny with various federal, state and local authorities relating to such matters as privacy practices, controlled substances, PDPs, expired products, environmental and safety matters, marketing and advertising practices, PBM and other pharmacy operations and various other business practices.
CMS released the Company’s 2025 star ratings in October 2024. The Company’s 2025 star ratings will be used to determine which of the Company’s Medicare Advantage plans have ratings of four stars or higher and qualify for bonus payments in 2026.
CMS released the Company’s 2026 star ratings in October 2025. The Company’s 2026 star ratings will be used to determine which of the Company’s Medicare Advantage plans have ratings of four stars or higher and qualify for bonus payments in 2027.
(2) “Other” represents less than 11% of the “Front store and other” revenue category in all periods presented. Pharmacy Pharmacy revenues represented over three-fourths of Pharmacy & Consumer Wellness segment revenues in each of 2024, 2023 and 2022.
(2) “Other” represents less than 11% of the “Front store and other” revenue category in all periods presented. Pharmacy Pharmacy revenues represented over three-fourths of Pharmacy & Consumer Wellness segment revenues in each of 2025, 2024 and 2023.
The clinics are staffed by nurse practitioners and physician assistants who utilize nationally established guidelines to deliver a variety of health care services. Payors value these clinics because they provide convenient, high-quality, cost-effective care, in many cases offering an attractive alternative to more expensive sites of care.
The clinics are staffed by nurse practitioners and physician assistants who utilize nationally established guidelines to deliver a variety of health care services, including expanding primary care services. Payors value these clinics because they provide convenient, high-quality, cost-effective care, in many cases offering an attractive alternative to more expensive sites of care.
In addition, state Medicaid agencies regularly audit, and state Attorneys General regularly investigate, the Company’s performance across all areas of its contractual obligations to the state to determine compliance and quality of services. The Company may be subject to, among other penalties, significant fines, sanctions, corrective actions, and enrollment freezes depending on the findings of these audits and reviews.
In addition, state Medicaid agencies regularly audit, and state officials regularly investigate, the Company’s performance across all areas of its contractual obligations to the state to determine compliance and quality of services. The Company may be subject to, among other penalties, significant fines, sanctions, corrective actions, and enrollment freezes depending on the findings of these audits and reviews.
Some of the prohibitions, have a broad reach and also prohibit otherwise legitimate business relationships with entities that are not health care providers, such as billing agencies or management companies. 34 Table of Contents Legal structures have been developed to comply with various state corporate practice of medicine and fee splitting laws.
Some of the prohibitions have a broad reach and also prohibit otherwise legitimate business relationships with entities that are not health care providers, such as billing agencies or management companies. Legal structures have been developed to comply with various state corporate practice of medicine and fee splitting laws.
In addition, the rapid pace of change as the industry evolves towards a consumer-focused retail marketplace, including Insurance Exchanges, and the increased use of technology to interact with members, providers and customers, increase the risks the Company faces from new entrants and disruptive actions by existing competitors compared to prior periods.
In addition, the rapid pace of change as the industry evolves towards a consumer-focused retail marketplace, including Private Exchanges and Public Exchanges, and the increased use of technology to interact with members, providers and customers, increase the risks the Company faces from new entrants and disruptive actions by existing competitors compared to prior periods.
The federal Health Insurance Portability and Accountability Act of 1996, as it has been amended from time to time, and the regulations issued thereunder (collectively, “HIPAA”), impose extensive requirements on the way in which health plans, providers, health care clearinghouses (known as “covered entities”) and their business associates use, disclose and safeguard protected health information (“PHI”).
The federal Health Insurance Portability and Accountability Act of 1996, as it has been amended from time to time, and the regulations issued thereunder (collectively, “HIPAA”), impose extensive requirements on the way in which health plans, providers, health care clearinghouses and their business associates use, disclose and safeguard protected health information (“PHI”).
CMS continuously evaluates how and where risk adjustment is captured, which from time-to-time has included the capture of diagnosis codes in home visits.
CMS continuously evaluates how and where risk adjustment is captured, which from time-to-time has included the capture of diagnosis codes from in home visits and chart reviews.
The Company continues to launch and enhance new and exclusive brands to create unmatched offerings and deliver other unique product offerings, including a full range of high-quality proprietary brand products that are only available through CVS stores. The Company currently carries approximately 4,500 proprietary brand products, which accounted for approximately 21% of front store revenues during 2024.
The Company continues to launch and enhance new and exclusive brands to create unmatched offerings and deliver other unique product offerings, including a full range of high-quality proprietary brand products that are only available through CVS stores. The Company currently carries approximately 4,500 proprietary brand products, which accounted for approximately 20% of front store revenues during 2025.
Members typically receive enhanced benefits over traditional fee-for-service Medicare coverage (“Original Medicare”), including reduced cost-sharing for preventive care, vision and other services. The Company offered network-based HMO and/or PPO plans in 46 states and Washington, D.C. in 2024. For certain qualifying employer groups, the Company offers Medicare PPO products nationally.
Members typically receive enhanced benefits over traditional fee-for-service Medicare coverage (“Original Medicare”), including reduced cost-sharing for preventive care, vision and other services. The Company offered network-based HMO and/or PPO plans in 44 states and Washington, D.C. in 2025. For certain qualifying employer groups, the Company offers Medicare PPO products nationally.
The data gathered during an IHE is also a resource that can be used by health plans to improve their Healthcare Effectiveness Data and Information Set (“HEDIS”) scores and Medicare Advantage star ratings. MinuteClinic As of December 31, 2024, the Company operated more than 900 MinuteClinic locations in the U.S.
The data gathered during an IHE is also a resource that can be used by health plans to improve their Healthcare Effectiveness Data and Information Set (“HEDIS”) scores and Medicare Advantage star ratings. MinuteClinic As of December 31, 2025, the Company operated more than 800 MinuteClinic locations in the U.S.
In the areas it serves, the Company competes with other drugstore chains (e.g., Walgreens and Rite Aid), supermarkets, discount retailers (e.g., Walmart), independent pharmacies, restrictive pharmacy networks, online retailers (e.g., Amazon), membership clubs, infusion pharmacies, as well as mail order dispensing pharmacies.
In the areas it serves, the Company competes with other drugstore chains (e.g., Walgreens), supermarkets, discount retailers (e.g., Walmart), independent pharmacies, restrictive pharmacy networks, online retailers (e.g., Amazon), membership clubs, infusion pharmacies, as well as mail order dispensing pharmacies.
Only Medicare Advantage plans with an overall star rating of 4 or more stars (out of 5 stars) are eligible for a quality bonus in their basic premium rates. The Company’s 2024 star ratings were used to determine which of its Medicare Advantage plans have ratings of 4 stars or higher and qualify for bonus payments in 2025.
Only Medicare Advantage plans with an overall star rating of 4 or more stars (out of 5 stars) are eligible for a quality bonus in their basic premium rates. The Company’s 2026 star ratings were used to determine which of its Medicare Advantage plans have ratings of 4 stars or higher and qualify for bonus payments in 2027.
CHIP are state-subsidized insurance programs that provide benefits for families with uninsured children. The Company offered these services on an Insured or ASC basis in 16 states in 2024. • Duals: The Company provides health coverage to beneficiaries who are dually eligible for both Medicare and Medicaid coverage.
CHIP are state-subsidized insurance programs that provide benefits for families with uninsured children. The Company offered these services on an Insured or ASC basis in 15 states in 2025. • Duals: The Company provides health coverage to beneficiaries who are dually eligible for both Medicare and Medicaid coverage.
The address of that website is http://www.sec.gov. The information on or linked to the Company’s website is neither a part of nor incorporated by reference in this 10-K or any of the Company’s other SEC filings.
The address of that website is http://www.sec.gov. The information on or 31 Table of Contents linked to the Company’s website is neither a part of nor incorporated by reference in this 10-K or any of the Company’s other SEC filings.
The Company expects the ACA, including potential changes thereto, to continue to significantly impact its business operations and operating results, including pricing, medical benefit ratios (“MBRs”) and the geographies in which the Company’s products are available. Medicare Regulation - The Company’s Medicare Advantage, PDP and other Medicare products are highly regulated by CMS.
The Company expects the ACA, including potential changes thereto, to continue to significantly impact its business operations and operating results, including pricing, medical benefit ratios (“MBRs”) and the geographies in which the Company’s products are available. Medicare Regulation - The Company’s Medicare Advantage, Medicare stand-alone Part D PDP and other Medicare products are highly regulated by CMS.
Contracts with CMS for coverage of Medicare-eligible individuals in the Health Care Benefits segment accounted for approximately 74%, 73% and 74%, respectively, of the Company’s consolidated revenues from the federal government in 2024, 2023 and 2022.
Contracts with CMS for coverage of Medicare-eligible individuals in the Health Care Benefits segment accounted for approximately 79%, 74% and 73%, respectively, of the Company’s consolidated revenues from the federal government in 2025, 2024 and 2023.
Additional Health Care Benefits segment competitors include other types of medical and dental provider organizations, various specialty service providers 6 (including PBM services providers), health care consultants, financial services companies, integrated health care delivery organizations (networks of providers who also coordinate administrative services for and assume insurance risk of their members), third party administrators (“TPAs”) and, for certain plans, programs sponsored by the federal or state governments.
Additional Health Care Benefits segment competitors include other types of medical and dental provider organizations, various specialty service providers (including pharmacy benefit management (“PBM”) services providers), health care consultants, financial services companies, integrated health care delivery organizations (networks of providers who also coordinate administrative services for and assume insurance risk of their members), third party administrators (“TPAs”) and, for certain plans, programs sponsored by the federal or state governments.
The Company’s international operations, including its remaining international insurance operations until they are closed down, are subject to different, and sometimes more stringent, legal and regulatory requirements, which vary widely by jurisdiction, including anti-corruption laws; economic sanctions laws; various privacy, insurance, tax, tariff and trade laws and regulations; corporate governance, privacy, data protection (including the EU’s General Data Protection Regulation which began to apply across the EU during 2018), data mining, data transfer, labor and employment, intellectual property, consumer protection and investment laws and regulations; discriminatory licensing procedures; compulsory cessions of reinsurance; required localization of records and funds; higher premium and income taxes; limitations on dividends and repatriation of capital; and requirements for local participation in an insurer’s ownership.
International Regulation - The Company’s international operations are subject to different, and sometimes more stringent, legal and regulatory requirements, which vary widely by jurisdiction, including anti-corruption laws; economic sanctions laws; various privacy, insurance, tax, tariff and trade laws and regulations; corporate governance, privacy, data protection (including the European Union’s (“EU’s”) General Data Protection Regulation which began to apply across the EU during 2018), data mining, data transfer, labor and employment, intellectual property, consumer protection and investment laws and regulations; discriminatory licensing procedures; compulsory cessions of reinsurance; required localization of records and funds; higher premium and income taxes; limitations on dividends and repatriation of capital; and requirements for local participation in an insurer’s ownership.
The loss of business from any one or a few independent brokers or agents would not have a material adverse effect on the earnings of the Health Care Benefits segment. Health Care Benefits segment revenues from the federal government accounted for 18% of the Company’s consolidated total revenues in 2024, 2023 and 2022.
The loss of business from any one or a few independent brokers or agents would not have a material adverse effect on the earnings of the Health Care Benefits segment. Health Care Benefits segment revenues from the federal government accounted for approximately 20% of the Company’s consolidated total revenues in 2025, 2024 and 2023.
The Company also offers Insured health care coverage to members who are dually-eligible for both Medicare and Medicaid. 4 Health Care Benefits products are sold through: the Company’s sales personnel; independent brokers, agents and consultants who assist in the production and servicing of business; as well as private health insurance exchanges (“Private Exchanges”) and Public Exchanges (together with Private Exchanges, “Insurance Exchanges”).
The Company also offers Insured health care coverage to members who are dually-eligible for both Medicare and Medicaid. 4 Health Care Benefits products are sold through: the Company’s sales personnel; independent brokers, agents and consultants who assist in the production and servicing of business; and private health insurance exchanges (“Private Exchanges”).
The Company’s PDP plans were rated 3.5 stars for 2025. Medicare Advantage and PDP plans that are rated less than 3 stars for three consecutive years are subject to contract termination by CMS. CMS continues to revise its star ratings system to make it harder to achieve 4 or more stars.
Medicare Advantage and PDP plans that are rated less than 3 stars for three consecutive years are subject to contract termination by CMS. CMS continues to revise its star ratings system to make it harder to achieve 4 or more stars.
Retail Pharmacy Network Management Services The Company maintains a national network of approximately 65,000 retail pharmacies, consisting of approximately 37,000 chain pharmacies (which include CVS pharmacy locations) and approximately 28,000 independent pharmacies, in the U.S., including Puerto Rico, the District of Columbia, Guam and the U.S. Virgin Islands.
Retail Pharmacy Network Management Services The Company maintains a national network of approximately 63,000 retail pharmacies, consisting of approximately 34,500 chain pharmacies (which include CVS pharmacy locations) and approximately 28,500 independent pharmacies, in the U.S., including Puerto Rico, the District of Columbia, Guam and the U.S. Virgin Islands.
Pharmacy & Consumer Wellness Segment The Pharmacy & Consumer Wellness segment dispenses prescriptions in its retail pharmacies and through its infusion operations, provides ancillary pharmacy services including pharmacy patient care programs, diagnostic testing and vaccination administration, and sells a wide assortment of health and wellness products and general merchandise.
Pharmacy & Consumer Wellness Segment The Pharmacy & Consumer Wellness segment dispenses prescriptions in its CVS Pharmacy ® retail locations and through its infusion operations, provides ancillary pharmacy services including pharmacy patient care programs and vaccination administration, and sells a wide assortment of health and wellness products and general merchandise.
In addition, the presence of operations in foreign countries potentially increases the Company’s exposure to the anti-bribery, anti-corruption and anti-money laundering provisions of U.S. law, including the FCPA, and corresponding foreign laws, including the U.K. Bribery Act 2010 (the “UK Bribery Act”).
In addition, the presence of operations in foreign countries potentially increases the Company’s exposure to the anti-bribery, anti-corruption and anti-money laundering provisions of U.S. law, including the Foreign Corrupt Practices Act of 1977 (the “FCPA”), and corresponding foreign laws, including the U.K. Bribery Act 2010 (the “UK Bribery Act”).
Preemption - ERISA generally preempts most state and local laws that relate to employee benefit plans, but the extent of the preemption continues to be reviewed by courts, including the U.S. Supreme Court. For example, in December 2020, the U.S.
Preemption - ERISA generally preempts most state and local laws that relate to employee benefit plans, but the extent of the preemption continues to be reviewed by courts, including the U.S. Supreme Court.
Without including the risk score trend increase, the advance 2026 rates will result in an expected average increase in revenue for the Medicare Advantage industry of 2.23%, though the rates may vary widely depending on the provider group and patient demographics. CMS intends to publish the final 2026 rate announcement no later than April 7, 2025.
Without including the risk score trend increase, the advance 2027 rates will result in an expected average increase in revenue for the Medicare Advantage industry of 0.09%, though the rates may vary widely depending on the provider group and patient demographics. CMS intends to publish the final 2027 rate announcement no later than April 6, 2026.
In addition, the Company requested increases in its premium rates in its Commercial Health Care Benefits business for 2025 and expects to request future increases in those rates in order to adequately price for projected medical cost trends, required expansions of coverage and rating limits, and significant assessments, fees and taxes imposed by the federal and state governments, including as a result of the ACA.
In addition, from time to time the Company may request increases in its premium rates in its Commercial Health Care Benefits business in order to adequately price for projected medical cost trends, required expansions of coverage and rating limits, and significant assessments, fees and taxes imposed by the federal and state governments, including as a result of the ACA.
Pharmacy & Consumer Wellness revenues by major product group are as follows: Percentage of Revenues 2024 2023 2022 Pharmacy (1) 80.9 % 78.9 % 76.9 % Front store and other (2) 19.1 % 21.1 % 23.1 % 100.0 % 100.0 % 100.0 % _____________________________________________ (1) Pharmacy includes LTC sales and sales in pharmacies within Target Corporation (“Target”) and other retail stores.
Pharmacy & Consumer Wellness revenues by major product group are as follows: Percentage of Revenues 2025 2024 2023 Pharmacy (1) 82.9 % 80.9 % 78.9 % Front store and other (2) 17.1 % 19.1 % 21.1 % 100.0 % 100.0 % 100.0 % _____________________________________________ (1) Pharmacy includes sales in pharmacies within Target Corporation (“Target”) and other retail stores.
These surveys cover a broad range of topics including development and opportunities, recognition, performance, belonging, well-being, compliance, and continuous improvement. In 2024, we conducted engagement surveys in both April and September. More than 150,000 colleagues participated in each survey and overall engagement stayed consistent across surveys.
These surveys cover a broad range of topics including development and opportunities, recognition, performance, belonging, well-being, compliance, and continuous improvement. In 2025, we conducted engagement surveys in both April and September. More than 200,000 colleagues participated in each survey and overall engagement improved across surveys.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur Oak Street Health business is subject to additional risks including, but not limited to, the following: • ability to attract new Medicare-eligible patients and credentialed, high-quality physicians and other providers for senior-focused primary care in a highly competitive market for such patients and providers; • satisfying the enrollment requirements under government health care programs for physicians and other providers in a timely manner; • dependence on a significant portion of revenue from Medicare or Medicare Advantage plans, which subjects Oak Street Health to reductions in Medicare reimbursement rates or changes in the rules governing the Medicare program; • dependence for a significant portion of revenue from agreements with a limited number of key payors with whom Oak Street Health contracts to provide services under terms that may permit a payor to amend the compensation arrangements or terminate the agreements without cause; • dependence on reimbursements from third-party payors, which can result in substantial delay, and on patients, through copayments and deductibles, which subjects Oak Street Health to additional reimbursement risk; • under the fixed fee (or capitated) agreements Oak Street Health enters into with health plans, the assumption of the risk that the actual cost of a service it provides to a patient exceeds the reimbursement provided by the health plan; • reductions in the quality ratings of Medicare health plans Oak Street Health serves could result in a shift of patients from, or the termination of, a health plan Oak Street Health serves; • submission of inaccurate, incomplete or erroneous data, including risk adjustment data, to health plans and government payors could result in inaccuracies in the revenue Oak Street Health records or receipt of overpayments, which may subject it to repayment obligations and penalties; • geographic concentration of its primary care centers; • risks associated with its existing legal proceedings and litigations; • laws regulating the corporate practice of medicine and the associated agreements entered into with physician practice groups restrict the manner in which the Oak Street Health business is able to direct the operations and otherwise exercise control of its physician practice groups • participation in CMS Innovation Center models, such as ACO REACH, which are subject to changes annually, generally in ways meant to reduce available payments to participants, including benchmarks that can be changed after the end of the performance year, and which has an end date without a plan for ongoing participation in a model by those participating; 42 • changes in the legal treatment of its contractual arrangements with its physician practice groups could impact the ability to consolidate the revenue of these groups; and • ability to maintain and enhance its reputation and brand recognition.
Biggest changeOur health care delivery businesses, which include health risk assessments and primary care services, including senior-focused value-based primary care services for Medicare eligible patients, face unique risks which include, but are not limited to, the following: 37 • ability to recruit, retain and grow a network of credentialed, high-quality physicians, physician assistants and nurse practitioners to provide clinical services in highly competitive markets for talent, especially in light of possible changes to the U.S. immigration policies, rules, laws or orders; • successful challenges to the treatment of certain health care providers as independent contractors in many states, which could result in increased costs and subject the business to regulatory sanction; • dependence on a concentrated number of key health plan customers; • the quality of the information received about plan members of such health plans for whom Signify Health will seek to provide in-home evaluations and other services, and the regulatory restrictions and requirements associated with directly contacting plan members; • ability to perform and ensure the quality of health risk assessments; • ability to achieve and receive shared health care cost savings; • the regulatory and business risks associated with participation in certain government health care programs and identification of diagnosis codes related to risk adjustment payments under Part C of the Medicare program; • health reform initiatives and changes in the rules governing government health care programs, including rules related to the use of in-home health risk assessments for the purpose of capturing individual risk used to calculate an individual’s risk adjustment factor or a change to how patient-level risk is determined for CMS programs; • use of “open source” software in its technology, which may make it easier for others to gain access or compromise its proprietary technology; • ability to attract new patients, including Medicare-eligible patients, in a highly competitive market; • satisfying the enrollment requirements under government health care programs for physicians and other providers in a timely manner; • dependence on a significant portion of revenue from Medicare or Medicare Advantage plans, which subjects Oak Street Health to reductions in Medicare reimbursement rates or changes in the rules governing the Medicare program; • dependence for a significant portion of revenue from agreements with a limited number of key payors with whom Oak Street Health contracts to provide services under terms that may permit a payor to amend the compensation arrangements or terminate the agreements without cause; • dependence on reimbursements from third-party payors, which can result in substantial delay, and on patients, through copayments and deductibles, which subjects the Company to additional reimbursement risk; • under the fixed fee (or capitated) agreements Oak Street Health enters into with health plans, the assumption of the risk that the actual cost of a service it provides to a patient exceeds the reimbursement provided by the health plan; • reductions in the quality ratings of Medicare health plans the Company serves could result in a shift of patients from, or the termination of, a health plan the Company serves; • submission of inaccurate, incomplete or erroneous data, including risk adjustment data, to health plans and government payors could result in inaccuracies in the revenue recorded or receipt of overpayments, which may subject the Company to repayment obligations and penalties; • geographic concentration of primary care centers; • laws regulating the corporate practice of medicine and the associated agreements entered into with physician practice groups restrict the manner in which the Oak Street Health business is able to direct the operations and otherwise exercise control of its physician practice groups; • changes in the legal treatment of contractual arrangements with physician practice groups could impact the ability to consolidate the revenue of these groups; and • ability to maintain and enhance reputation and brand recognition.
If we are unable to increase our prices to reflect, or otherwise mitigate the impact of, increasing costs, our profitability will be adversely affected.
If we are unable to increase our prices to reflect, or otherwise mitigate the impact of, increasing costs, our profitability will be adversely affected.
Volatility, uncertainty and/or disruptions in the global capital markets, particularly the U.S. credit markets, and governments’ monetary policy, particularly U.S. monetary policy, can significantly and adversely affect the value of our investment portfolio, our operating results and/or our financial condition by: • significantly reducing the value and/or liquidity of the debt securities we hold in our investment portfolio and creating realized capital losses that reduce our operating results and/or unrealized capital losses that reduce our shareholders’ equity; • lowering interest rates on high-quality short-term or medium-term debt securities and thereby materially reducing our net investment income and operating results as the proceeds from securities in our investment portfolio that mature or are otherwise disposed of continue to be reinvested in lower yielding securities; • reducing the fair values of our investments if interest rates rise; • causing non-performance of or defaults on their obligations to us by third parties, including customers, issuers of securities in our investment portfolio, mortgage borrowers and/or reinsurance and/or derivatives counterparties; • making it more difficult to value certain of our investment securities, for example if trading becomes less frequent, which could lead to significant period-to-period changes in our estimates of the fair values of those securities and cause period-to-period volatility in our net income and shareholders’ equity; • reducing our ability to issue debt securities at attractive interest rates, thereby increasing our interest expense and decreasing our operating results; and • reducing our ability to issue other securities.
Volatility, uncertainty and/or disruptions in the global capital markets, particularly the U.S. credit markets, and governments’ monetary policy, particularly U.S. monetary policy, can significantly and adversely affect the value of our investment portfolio, our operating results and/or our financial condition by: 54 • significantly reducing the value and/or liquidity of the debt securities we hold in our investment portfolio and creating realized capital losses that reduce our operating results and/or unrealized capital losses that reduce our shareholders’ equity; • lowering interest rates on high-quality short-term or medium-term debt securities and thereby materially reducing our net investment income and operating results as the proceeds from securities in our investment portfolio that mature or are otherwise disposed of continue to be reinvested in lower yielding securities; • reducing the fair values of our investments if interest rates rise; • causing non-performance of or defaults on their obligations to us by third parties, including customers, issuers of securities in our investment portfolio, mortgage borrowers and/or reinsurance and/or derivatives counterparties; • making it more difficult to value certain of our investment securities, for example if trading becomes less frequent, which could lead to significant period-to-period changes in our estimates of the fair values of those securities and cause period-to-period volatility in our net income and shareholders’ equity; • reducing our ability to issue debt securities at attractive interest rates, thereby increasing our interest expense and decreasing our operating results; and • reducing our ability to issue other securities.
Certain of our Health Services and Pharmacy & Consumer Wellness operations, products and services are subject to: • the clinical quality, patient safety and other risks inherent in the dispensing, packaging and distribution of drugs and other health care products and services, including claims related to purported dispensing and other operational errors (any failure by our Health Services and/or Pharmacy & Consumer Wellness operations to adhere to the laws and regulations applicable to the dispensing of drugs could subject us to civil and criminal penalties); 47 • federal and state anti-kickback and other laws that govern our relationship with drug manufacturers, customers and consumers; • compliance requirements under ERISA, including fiduciary obligations in connection with the development and implementation of items such as drug formularies and preferred drug listings; and • federal and state legislative proposals and/or regulatory activity that could adversely affect pharmacy benefit industry practices.
Certain of our Health Services and Pharmacy & Consumer Wellness operations, products and services are subject to: • the clinical quality, patient safety and other risks inherent in the dispensing, packaging and distribution of drugs and other health care products and services, including claims related to purported dispensing and other operational errors (any failure by our Health Services and/or Pharmacy & Consumer Wellness operations to adhere to the laws and regulations applicable to the dispensing of drugs could subject us to civil and criminal penalties); • federal and state anti-kickback and other laws that govern our relationship with drug manufacturers, customers and consumers; • compliance requirements under ERISA, including fiduciary obligations in connection with the development and implementation of items such as drug formularies and preferred drug listings; and • federal and state legislative proposals and/or regulatory activity that could adversely affect pharmacy benefit industry practices.
Negative public perception and/or publicity of our industries in general, or of us or our key vendors, brokers or product distribution networks in particular, can further increase our costs of doing business and adversely affect our operating results and our stock price by: • adversely affecting our brand and reputation; 43 • adversely affecting our ability to market and sell our products and/or services and/or retain our existing customers and members; • requiring us to change our products and/or services; • reducing or restricting the revenue we can receive for our products and/or services; and/or • increasing or significantly changing the regulatory and legislative requirements with which we must comply.
Negative public perception and/or publicity of our industries in general, or of us or our key vendors, brokers or product distribution networks in particular, can further increase our costs of doing business and adversely affect our operating results and our stock price by: • adversely affecting our brand and reputation; • adversely affecting our ability to market and sell our products and/or services and/or retain our existing customers and members; • requiring us to change our products and/or services; • reducing or restricting the revenue we can receive for our products and/or services; and/or • increasing or significantly changing the regulatory and legislative requirements with which we must comply.
In addition, breaches of our and/or our vendors’ security measures and the unauthorized access to or dissemination of personal information, proprietary information or confidential information about us, our customers, our members or other third-parties, could expose our customers’, members’ and other constituents’ information and our customers, members and other constituents to the risk of financial or medical identity theft, or expose us or other third parties to a risk of loss or misuse of this information, and result in investigations, regulatory enforcement actions, material fines and penalties, loss of customers, litigation or other actions, which could have a material adverse effect on our brand, reputation, businesses, operating results and cash flows.
In addition, breaches of our and/or our vendors’ security measures and the unauthorized access to or dissemination of personal information, proprietary information or confidential information about us, our customers, our 50 members or other third parties, could expose our customers’, members’ and other constituents’ information and our customers, members and other constituents to the risk of financial or medical identity theft, or expose us or other third parties to a risk of loss or misuse of this information, and result in investigations, regulatory enforcement actions, material fines and penalties, loss of customers, litigation or other actions, which could have a material adverse effect on our brand, reputation, businesses, operating results and cash flows.
Negative publicity may come as a result of adverse media coverage, litigation against us and other industry participants, the ongoing public debates over drug pricing, PBMs, government involvement in drug pricing and purchasing, changes to the ACA, governmental hearings and/or investigations, actual or perceived shortfalls regarding our industries’ or our own products, including Medicare Advantage plans in general, and/or business practices (including PBM operations, drug pricing and insurance coverage determinations) and social media and other media relations activities.
Negative publicity may come as a result of adverse media coverage, litigation against us and other industry participants, the ongoing public debates over drug pricing, PBMs, government 38 involvement in drug pricing and purchasing, changes to the ACA, governmental hearings and/or investigations, actual or perceived shortfalls regarding our industries’ or our own products, including Medicare Advantage plans in general, and/or business practices (including PBM operations, drug pricing and insurance coverage determinations) and social media and other media relations activities.
Marketplace dynamics and regulatory changes also have adversely affected our ability to offer plan sponsors pricing that includes the use of retail “differential” or “spread,” which could adversely affect our future profitability, and we expect these trends to continue. • Our retail pharmacy, specialty pharmacy and LTC pharmacy operations have been affected by reimbursement pressure caused by competition, including client demands for lower prices, generic drug pricing, earlier than expected generic drug introductions and network reimbursement pressure.
Marketplace dynamics and regulatory changes also have adversely affected our ability to offer plan sponsors pricing that includes the use of retail “differential” or “spread,” which could adversely affect our future profitability, and we expect these trends to continue. • Our retail pharmacy and specialty pharmacy operations have been affected by reimbursement pressure caused by competition, including client demands for lower prices, generic drug pricing, earlier than expected generic drug introductions and network reimbursement pressure.
Our businesses, profitability and growth also may be adversely affected by (i) judicial and regulatory decisions that change and/or expand the interpretations of existing statutes and regulations, expand fiduciary obligations, impose medical or bad faith liability, increase our responsibilities under ERISA or the remedies available under ERISA, or reduce the scope of ERISA and Medicare Part D preemption of state law claims or (ii) other legislation and regulations.
Our businesses, profitability and growth also may be adversely affected by (i) judicial and regulatory decisions that change and/or expand the interpretations of existing statutes and regulations, expand fiduciary obligations, impose medical or bad faith 42 liability, increase our responsibilities under ERISA or the remedies available under ERISA, or reduce the scope of ERISA and Medicare Part D preemption of state law claims or (ii) other legislation and regulations.
It is possible that the pharmaceutical industry, regulators, or federal policymakers may evaluate and/or develop an alternative pricing reference to replace AWP or WAC, which are the pricing references used for many of our PBM and LTC client contracts, drug purchase agreements, retail network contracts, specialty payor agreements and other contracts with third party payors in connection with the reimbursement of drug payments.
It is possible that the pharmaceutical industry, regulators, or federal policymakers may evaluate and/or develop an alternative pricing reference to replace AWP or WAC, which are the pricing references used for many of our PBM client contracts, drug purchase agreements, retail network contracts, specialty payor agreements and other contracts with third party payors in connection with the reimbursement of drug payments.
A termination or modification to any of these relationships could adversely affect our 61 prescription drug supply and have a material adverse effect on our businesses, operating results and financial condition. Moreover, many products distributed by our pharmacies are manufactured with ingredients that are susceptible to supply shortages. In some cases, we depend upon a single source of supply.
A termination or modification to any of these relationships could adversely affect our prescription drug supply and have a material adverse effect on our businesses, operating results and financial condition. Moreover, many products distributed by our pharmacies are manufactured with ingredients that are susceptible to supply shortages. In some cases, we depend upon a single source of supply.
New distribution channels create new disintermediation risk. We may be subject to penalties or other regulatory actions as a result of the marketing practices of brokers and agents selling our products. 58 Our products are sold primarily through our sales personnel, who frequently work with independent brokers, consultants and agents who assist in the marketing, production and servicing of business.
New distribution channels create new disintermediation risk. We may be subject to penalties or other regulatory actions as a result of the marketing practices of brokers and agents selling our products. Our products are sold primarily through our sales personnel, who frequently work with independent brokers, consultants and agents who assist in the marketing, production and servicing of business.
If any of the following risks or uncertainties develops into actual events or if the circumstances described in the risks or uncertainties occur or continue to occur, those events or circumstances could have a material adverse effect on our businesses, 35 operating results, cash flows, financial condition and/or stock price, among other effects on us.
If any of the following risks or uncertainties develops into actual events or if the circumstances described in the risks or uncertainties occur or continue to occur, those events or circumstances could have a material adverse effect on our businesses, operating results, cash flows, financial condition and/or stock price, among other effects on us.
Further, our ability to reflect ACA assessments, fees and taxes in our Medicare, Medicaid and CHIP premium rates is limited. 52 Since 2013, HHS has issued determinations to health plans that their premium rate increases were “unreasonable,” and we may experience challenges to appropriate premium rate increases in certain states.
Further, our ability to reflect ACA assessments, fees and taxes in our Medicare, Medicaid and CHIP premium rates is limited. Since 2013, HHS has issued determinations to health plans that their premium rate increases were “unreasonable,” and we may experience challenges to appropriate premium rate increases in certain states.
If we fail to abide by applicable rules or requirements, or if data relating to our payment systems is compromised due to a breach or misuse, we may be responsible for any costs incurred by payment card issuing banks and other third parties or subject to fines and 59 higher transaction fees.
If we fail to abide by applicable rules or requirements, or if data relating to our payment systems is compromised due to a breach or misuse, we may be responsible for any costs incurred by payment card issuing banks and other third parties or subject to fines and higher transaction fees.
We anticipate continued regulatory and legislative action to increase regulation of premium rates in our Insured Health Care Benefits products. We may not be able to obtain rates that are actuarially justified or that are sufficient to make our policies profitable in one or more product lines or geographies.
We anticipate continued regulatory and legislative action to increase regulation of premium rates in our Insured Health Care Benefits products. We may not be able to obtain rates that are actuarially justified or that are sufficient to make our policies 48 profitable in one or more product lines or geographies.
Adverse economic conditions in the U.S. and abroad, including those caused by inflation, high interest rates, declines in consumer confidence, increases in unemployment and supply chain disruptions, all of which we have experienced over the last number of years, can materially and adversely impact our businesses, operating results, cash flows and financial condition, including: • In our Health Care Benefits segment, by causing unanticipated increases and volatility in utilization of covered services, increases in fraudulent claims and disputes, changes in medical claim submission patterns and/or increases in medical unit costs and/or provider behavior as hospitals and other providers attempt to maintain revenue levels in response to economic conditions, each of which would increase our costs and limit our ability to accurately detect, forecast, manage, reserve and price for our (and our self-insured customers’) medical cost trends and incurred and future health care and other benefits costs; causing customers and potential customers of our Health Care Benefits segment, particularly smaller employers and individuals, to forego obtaining or renewing their health and other coverage with us; and also affect our ability to profitably grow and diversify our Health Care Benefits membership. • In our Health Services segment, by causing drug utilization to decline, reducing demand for PBM services and adversely affecting the financial health of our PBM clients. • In our Pharmacy & Consumer Wellness segment, by causing drug utilization to decline, changing consumer purchasing power, preferences and/or spending patterns leading to reduced consumer demand for products sold in our stores, potentially increasing levels of theft at our retail locations and adversely affecting the financial health of our LTC pharmacy customers. • By causing our existing customers to reduce workforces (including due to business failures), which would reduce our revenues, the number of covered lives in our PBM clients and/or the number of members our Health Care Benefits segment serves.
Adverse economic conditions in the U.S. and abroad, including those caused by inflation, high interest rates, declines in consumer confidence, increases in unemployment and supply chain disruptions, all of which we have experienced over the last number of years, can materially and adversely impact our businesses, operating results, cash flows and financial condition, including: • In our Health Care Benefits segment, by causing unanticipated increases and volatility in utilization of covered services, increases in fraudulent claims and disputes, changes in medical claim submission patterns and/or increases in medical unit costs and/or provider behavior as hospitals and other providers attempt to maintain revenue levels in response to economic conditions, each of which would increase our costs and limit our ability to accurately detect, forecast, manage, reserve and price for our (and our self-insured customers’) medical cost trends and incurred and future health care and other benefit costs; causing customers and potential customers of our Health Care Benefits segment, particularly smaller employers and individuals, to forgo obtaining or renewing their health and other coverage with us; and also affect our ability to profitably grow and diversify our Health Care Benefits membership. • In our Health Services segment, by causing drug utilization to decline, reducing demand for PBM services and adversely affecting the financial health of our PBM clients. • In our Pharmacy & Consumer Wellness segment, by causing drug utilization to decline, changing consumer purchasing power, preferences and/or spending patterns leading to reduced consumer demand for products sold in our stores, potentially increasing levels of theft at our retail locations. • By causing our existing customers to reduce workforces (including due to business failures), which would reduce our revenues, the number of covered lives in our PBM clients and/or the number of members our Health Care Benefits segment serves.
Litigation, and particularly securities, derivative, collective or class action and qui tam litigation, is often expensive and disruptive. Many of the legal proceedings against us seek substantial damages (including non-economic or punitive damages 48 and treble damages), and certain of these proceedings also seek changes in our business practices.
Litigation, and particularly securities, derivative, collective or class action and qui tam litigation, is often expensive and disruptive. Many of the legal proceedings against us seek substantial damages (including non-economic or punitive damages and treble damages), and certain of these proceedings also seek changes in our business practices.
Funding for these programs is dependent on many factors outside our control, including general economic conditions, continuing government efforts to contain health care costs and budgetary constraints at the federal or applicable state or local level and general political issues and priorities.
Funding for these programs is dependent on many factors outside 47 our control, including general economic conditions, continuing government efforts to contain health care costs and budgetary constraints at the federal or applicable state or local level and general political issues and priorities.
Our businesses depend in large part on these systems to adequately price our 57 products and services; accurately establish reserves, process claims and report operating results; and interact with providers, employer plan sponsors, customers, members, consumers and vendors in an efficient and uninterrupted fashion.
Our businesses depend in large part on these systems to adequately price our products and services; accurately establish reserves, process claims and report operating results; and interact with providers, employer plan sponsors, customers, members, consumers and vendors in an efficient and uninterrupted fashion.
The profitability of our Pharmacy & Consumer Wellness and Health Services segments is dependent upon the utilization of prescription drug products. We dispense significant volumes of brand name and generic drugs from our retail, LTC, specialty and mail order pharmacies, and the retail pharmacies in our PBM’s network also dispense significant volumes of brand name and generic drugs.
The profitability of our Pharmacy & Consumer Wellness and Health Services segments is dependent upon the utilization of prescription drug products. We dispense significant volumes of brand name and generic drugs from our retail, specialty and mail order pharmacies, and the retail pharmacies in our PBM’s network also dispense significant volumes of brand name and generic drugs.
While we believe joint ventures, ACOs and other non-traditional health care provider organizational structures present opportunities for us, the implementation of our joint ventures and other non-traditional structure strategies may not achieve the intended results, which could adversely affect our operating results and cash flows.
While we believe joint ventures and other non-traditional health care provider organizational structures present opportunities for us, the implementation of our joint ventures and other non-traditional structure strategies may not achieve the intended results, which could adversely affect our operating results and cash flows.
In addition, our failure to adequately plan for succession of senior management and other key management roles or the failure of key employees to successfully transition into new roles could have a material adverse effect on our businesses, operating results and/or future performance.
In addition, our failure to adequately plan for succession of senior management and other key management roles or the failure of key employees to successfully transition into new roles could have a material adverse effect on our businesses, operating 52 results and/or future performance.
Noncompliance with applicable privacy or security laws or regulations, or any security breach, information security incident, and any other incident involving the theft, misappropriation, compromise, loss or other unauthorized disclosure of, or access to, customer, member or other constituent information, whether by us, by one of our business associates or vendors or by another third party, could require us to expend significant resources to remediate any damage, could interrupt our operations and could adversely affect our brand and reputation, membership and operating results and also could expose and/or has exposed us to mandatory disclosure requirements, adverse media attention, litigation (including class action litigation), governmental investigations and enforcement proceedings, material fines, penalties and/or remediation costs, and compensatory, special, punitive and statutory damages, consent orders, adverse actions against our licenses to do business and/or injunctive relief, any of which could adversely affect our businesses, operating results, cash flows or financial condition.
Events that adversely affect that trust, noncompliance with applicable privacy or security laws or regulations, or any security breach, information security incident, and any other incident involving the theft, misappropriation, compromise, loss or other unauthorized disclosure of, or access to, customer, member or other constituent information, whether by us, by one of our business associates or vendors or by another third party, could require us to expend significant resources to remediate any damage, could interrupt our operations and could adversely affect our brand and reputation, membership and operating results and also could expose and/or has exposed us to mandatory disclosure requirements, adverse media attention, litigation (including class action litigation), governmental investigations and enforcement proceedings, material fines, penalties and/or remediation costs, and compensatory, special, punitive and statutory damages, consent orders, adverse actions against our licenses to do business and/or injunctive relief, any of which could adversely affect our businesses, operating results, cash flows or financial condition.
For example, laws in Arkansas, North Dakota and Oklahoma have attempted to limit PBM practices and have been subject to recent lawsuits. Additional litigation has been filed in several states to challenge ERISA and Medicare Part D preemption.
For example, laws in Arkansas, Louisiana, North Dakota and Oklahoma have attempted to limit PBM practices and have been subject to recent lawsuits. Additional litigation has been filed in several states to challenge ERISA and Medicare Part D preemption.
In addition, some types of damages, like punitive damages, may not be covered by insurance, and in some jurisdictions the coverage of punitive damages is prohibited. Insurance coverage for all or some forms of liability also may become unavailable or prohibitively expensive in the future.
In 44 addition, some types of damages, like punitive damages, may not be covered by insurance, and in some jurisdictions the coverage of punitive damages is prohibited. Insurance coverage for all or some forms of liability also may become unavailable or prohibitively expensive in the future.
Our information systems are subject to damage or interruption from power outages, facility damage, computer and telecommunications failures, computer viruses, security breaches (including credit card or personally identifiable information breaches), cyberattacks, vandalism, catastrophic events and human error.
Our and our vendors’ information systems are subject to damage or interruption from power outages, facility damage, computer and telecommunications failures, computer viruses, security breaches (including credit card or personally identifiable information breaches), cyberattacks, vandalism, catastrophic events and human error.
For example, our business associated with members who have elected to receive benefits under Consolidated Omnibus Budget Reconciliation Act (known as “COBRA”) typically has an MBR that is significantly higher than our overall Commercial MBR. • By affecting the ability of our customers to obtain adequate financing, which could result in an inability of our customers to pay timely, or at all, the amounts owed to us. • By causing both state and federal government payers, as a result of budget deficits or spending reductions, to suspend or seek to reduce their health care expenditures resulting in our customers delaying payments to us or renegotiating their contracts with us. • By causing our clients and customers and potential clients and customers, particularly those with the most employees or members, and state and local governments, to force us to compete more vigorously on factors such as price and service, including service, discount and other performance guarantees, to retain or obtain their business. • By causing members and other consumers to decide to postpone, or not to seek, medical treatment which may lead them to incur more expensive medical treatment in the future and/or decrease our prescription volumes. • By causing an increasing in the prevalence of high deductible health plans and health plan designs favoring co-insurance over co-payments. • By weakening the ability or perceived ability of the issuers and/or guarantors of the debt or other securities we hold in our investment portfolio to perform on their obligations to us, which could result in defaults in those securities and has reduced, and may further reduce, the value of those securities and has created, and may continue to create, net realized capital losses for us that reduce our operating results. • By causing customers, including self-insured customers in our Health Care Benefits segment, medical members, medical providers and the other companies to be unable to perform their obligations to us which could reduce our operating results. 39 • By affecting our ability to obtain necessary financing on acceptable terms, our ability to secure suitable store locations under acceptable terms and our ability to execute sale-leaseback transactions under acceptable terms. • By weakening the ability of our former subsidiaries and/or their purchasers to satisfy their lease obligations that we have guaranteed and causing the Company to be required to satisfy those obligations. • By weakening the financial condition of other insurers, including long-term care insurers and life insurers, which increases the risk that we will receive significant assessments for obligations of insolvent insurers to policyholders and claimants. • By continuing to cause inflation that could cause interest rates to further increase and thereby further increase our interest expense and reduce our operating results, as well as further decrease the value of the debt securities we hold in our investment portfolio, which would further reduce our operating results and/or adversely affect our financial condition.
For example, our business associated with members who have elected to receive benefits under Consolidated Omnibus Budget Reconciliation Act (known as “COBRA”) typically has an MBR that is significantly higher than our overall Commercial MBR. • By affecting the ability of our customers to obtain adequate financing, which could result in an inability of our customers to pay timely, or at all, the amounts owed to us. • By causing both state and federal government payers, as a result of budget deficits or spending reductions, to suspend or seek to reduce their health care expenditures resulting in our customers delaying payments to us or renegotiating their contracts with us. • By causing our clients and customers and potential clients and customers, particularly those with the most employees or members, and state and local governments, to force us to compete more vigorously on factors such as price and service, including service, discount and other performance guarantees, to retain or obtain their business. • By causing members and other consumers to decide to postpone, or not to seek, medical treatment which may lead them to incur more expensive medical treatment in the future and/or decrease our prescription volumes. • By causing an increase in the prevalence of high-deductible health plans and health plan designs favoring co-insurance over co-payments. • By weakening the ability or perceived ability of the issuers and/or guarantors of the debt or other securities we hold in our investment portfolio to perform on their obligations to us, which could result in defaults in those securities and has reduced, and may further reduce, the value of those securities and has created, and may continue to create, net realized capital losses for us that reduce our operating results. • By causing customers, including self-insured customers in our Health Care Benefits segment, medical members, medical providers and the other companies to be unable to perform their obligations to us which could reduce our operating results. • By affecting our ability to obtain necessary financing on acceptable terms, our ability to secure suitable store locations under acceptable terms. • By weakening the ability of our former subsidiaries and/or their purchasers to satisfy their lease obligations that we have guaranteed and causing the Company to be required to satisfy those obligations. 35 • By weakening the financial condition of other insurers, including long-term care insurers and life insurers, which increases the risk that we will receive significant assessments for obligations of insolvent insurers to policyholders and claimants. • By continuing to cause inflation that could cause interest rates to further increase and thereby further increase our interest expense and reduce our operating results, as well as further decrease the value of the debt securities we hold in our investment portfolio, which would further reduce our operating results and/or adversely affect our financial condition.
Our ability to attract and retain customers and members is dependent upon providing compliant, cost effective, quality customer service operations (such as call center operations, PBM functions, retail pharmacy and LTC services, retail, mail order and specialty pharmacy prescription delivery, claims processing, customer case installation and online access and tools) that meet or exceed our customers’ and members’ expectations, either directly or through vendors.
Our ability to attract and retain customers and members is dependent upon providing compliant, cost effective, quality customer service operations (such as call center operations, PBM functions, retail pharmacy, retail, mail order and specialty pharmacy prescription delivery, claims processing, customer case installation and online access and tools) that meet or exceed our customers’ and members’ expectations, either directly or through vendors.
Failure to timely identify or effectively respond to changing consumer preferences, spending patterns and evolving demographic mixes in the communities we serve, including shifts toward online shopping, or failure to maintain desirable selections of merchandise, store environments or guests experiences could adversely affect our relationship with our customers and clients and the demand for our products and services and could result in excess inventories of products.
Failure to timely identify or effectively respond to changing consumer preferences, spending patterns and evolving demographic mixes in the communities we serve, including shifts toward online shopping, or failure to maintain desirable selections of merchandise, store environments or guest experiences could adversely affect our relationship with our customers and clients and the demand for our products and services and could result in excess inventories of products.
These laws, rules and regulations are subject to change (and many are rapidly evolving) and in recent 56 years have given rise to increased enforcement activity, litigation, and other disputes.
These laws, rules and regulations are subject to change (and many are rapidly evolving) and in recent years have given rise to increased enforcement activity, litigation, and other disputes.
These changes may increase our medical and other covered benefits costs, may affect the way we price our products and services and estimate our medical and other covered benefits costs and may require us to change our operations, including by withdrawing from certain geographies where we do not have a significant presence across our businesses or are unable to collaborate or contract with providers on acceptable terms.
These changes may increase our medical and other covered benefit costs, may affect the way we price our products and services and estimate our medical and other covered benefit costs and may require us to change our operations, including by withdrawing from certain geographies where we do not have a significant presence across our businesses or are unable to collaborate or contract with providers on acceptable terms.
In addition, recent trends toward greater consumer engagement in health care require new and enhanced technologies, including more sophisticated applications for mobile devices.
In addition, recent trends toward greater consumer engagement in health care require new and enhanced technologies, including more sophisticated 51 applications for mobile devices.
If we lose our relationship with one or more drug manufacturers, or if the discounts or rebates provided by drug manufacturers decline, our operating results, cash flows and/or prospects could be adversely affected. • If laws or regulations are promulgated that limit the number of PBMs available in a particular business or geography, competition in those businesses and geographies could be amplified and could adversely affect our revenues and operating results. 40 • The PBM industry has been experiencing price compression as a result of competitive pressures and increased client demands for lower prices; increased revenue sharing, including sharing in a larger portion of payments, including rebates and fees, to PBMs and group purchasing organizations received from drug manufacturers; enhanced service offerings and/or higher service levels.
If we lose our relationship with one or more drug manufacturers, or if the discounts or rebates provided by drug manufacturers decline, our operating results, cash flows and/or prospects could be adversely affected. • If laws or regulations are promulgated that limit the number of PBMs available in a particular business or geography, competition in those businesses and geographies could be amplified and could adversely affect our revenues and operating results. • The PBM industry has been experiencing price compression as a result of competitive pressures and increased client demands for lower prices; pricing guarantees; increased revenue sharing, including sharing in a larger portion of payments, including rebates and fees, to PBMs and group purchasing organizations received from drug manufacturers; enhanced 36 service offerings and/or higher service levels.
In addition, government-imposed limitations on Medicare and Medicaid reimbursements to health plans and providers have caused the private sector to bear a greater share of increasing health care and other benefits costs over time, and future amendments to the ACA that increase the uninsured population may amplify this issue.
In addition, government-imposed limitations on Medicare and Medicaid reimbursements to health plans and providers have caused the private sector to bear a greater share of increasing health care and other benefit costs over time, and future amendments to the ACA that increase the uninsured population may amplify this issue.
The occurrence of natural disasters or extreme weather events, such as hurricanes, tropical storms, floods, wildfires, earthquakes, tsunamis, cyclones, typhoons, extended winter storms, droughts and tornadoes; epidemics, pandemics or disease 45 outbreaks and other extreme events and man-made disasters, such as nuclear or biological attacks or other acts of violence, such as active shooter situations, whether as a result of war or terrorism or otherwise, can have a material adverse effect on the U.S. economy in general, our industries and us specifically.
The occurrence of natural disasters or extreme weather events, such as hurricanes, tropical storms, floods, wildfires, earthquakes, tsunamis, cyclones, typhoons, extended winter storms, droughts, tornadoes, epidemics, pandemics or disease outbreaks and other extreme events and man-made disasters, such as nuclear or biological attacks or other acts of violence, such 40 as active shooter situations, whether as a result of war or terrorism or otherwise, can have a material adverse effect on the U.S. economy in general, our industries, our vendors and us specifically.
Reductions in workforce by our customers can also cause unanticipated increases in the health care and other benefits costs of our Health Care Benefits segment.
Reductions in workforce by our customers can also cause unanticipated increases in the health care and other benefit costs of our Health Care Benefits segment.
A worsening (or improvement) of health care cost trend rates or changes in claim payment patterns from those that we assumed in estimating health care costs payable as of December 31, 2024 would cause these estimates to change in the near term, and such a change could be material.
A worsening (or improvement) of health care cost trend rates or changes in claim payment patterns from those that we assumed in estimating health care costs payable as of December 31, 2025 would cause these estimates to change in the near term, and such a change could be material.
Extreme events or the threat of extreme events could result in significant health care costs, including those associated with behavior health offerings, waiving certain medical requirements or assisting with replacement medications or transfer prescriptions, which could also be affected by the government’s actions and the responsiveness of public health agencies and other insurers.
Extreme events or the threat of extreme events could result in significant health care costs, including those associated with behavioral health offerings, waiving certain medical requirements or assisting with replacement medications or transfer prescriptions, which could also be affected by the government’s actions and the responsiveness of public health agencies and other insurers.
If we fail to comply with laws and regulations that apply to government programs, we could be subject to criminal fines, civil penalties, premium refunds, prohibitions on marketing or active or passive enrollment of members, corrective actions, termination of our contracts or other sanctions, which could have a material adverse effect on our ability to participate in Public Exchange, Medicare Advantage, Medicare Part D, Medicaid, dual eligible, and dual eligible special needs plans and other programs, our brand and reputation, and our operating results, cash flows and financial condition.
If we fail to comply with laws and regulations that apply to government programs, we could be subject to criminal fines, civil penalties, premium refunds, prohibitions on marketing or active or passive enrollment of members, corrective actions, termination of our contracts or other sanctions, which could have a material adverse effect on our ability to participate in Medicare Advantage, Medicare Part D, Medicaid and dual eligible plans and other programs, our brand and reputation, and our operating results, cash flows and financial condition.
The laws and regulations governing participation in the Public Exchanges, Medicare Advantage (including dual eligible special needs plans), Medicare Part D, Medicaid, and Managed Medicaid plans are complex, are subject to interpretation and can expose us to penalties for non-compliance.
The laws and regulations governing participation in Medicare Advantage (including dual eligible special needs plans), Medicare Part D, Medicaid, and Managed Medicaid plans are complex, are subject to interpretation and can expose us to penalties for non-compliance.
For these operations, we depend in part on the secure transmission of confidential information over public networks. We have many different information and other technology systems supporting our different businesses, including technology acquired as part of acquisitions, such as Canopy.
For these operations, we depend in part on the secure transmission of confidential information over public networks. We have many different information and other technology systems supporting our different businesses, including technology acquired as part of acquisitions.
We face unique regulatory and other challenges that may inhibit the profitability of our Medicare and Medicaid businesses. • In April 2024, CMS issued its final notice detailing final 2025 Medicare Advantage payment rates.
We face unique regulatory and other challenges in our Medicare and Medicaid businesses. We face unique regulatory and other challenges that may inhibit the profitability of our Medicare and Medicaid businesses. • In April 2025, CMS issued its final notice detailing final 2026 Medicare Advantage payment rates.
The impact of known cyberattacks has not been material to the Company’s operations or operating results through December 31, 2024. The Board is regularly informed regarding the Company’s information security policies, practices and status.
The impact of known cyberattacks has not been material to the Company’s operations or operating results through December 31, 2025. The Board is regularly informed regarding the Company’s information security policies, practices and status.
If we are convicted of fraud or other criminal conduct in the performance of a government program or if there is an adverse decision against us under the False Claims Act, we may be temporarily or permanently suspended from participating in government health care programs, including Public Exchange, Medicare Advantage, Medicare Part D, Medicaid, dual eligible and dual eligible special needs plan programs, and we also may be required to pay significant fines and/or other monetary penalties.
If we are convicted of fraud or other criminal conduct in the performance of a government program or if there is an adverse decision against us under the False Claims Act, we may be temporarily or permanently suspended from participating in government health care programs, including Medicare Advantage, Medicare Part D, Medicaid and dual eligible plan programs, and we also may be required to pay significant fines and/or other monetary penalties.
There is no guarantee we will be able to attract and retain such employees or that competition among potential employers will not result in increased compensation and/or benefits costs.
There is no guarantee we will be able to attract and retain such employees or that competition among potential employers will not result in increased compensation and/or benefit costs.
We also need to develop or acquire new technology systems, contract with new vendors or modify certain of our existing systems to support the consumer-oriented and transformational products and services we are developing, operating and expanding and/or to meet current and developing industry and regulatory standards, including to keep pace with continuing changes in information processing technology, emerging cybersecurity risks and threats, and changes to applicable privacy and security laws, rules and regulations.
We must continuously develop and acquire new technology systems, contract with new vendors or modify certain of our existing systems to support the consumer-oriented and transformational products and services we are developing, operating and expanding and/or to meet current and developing industry and regulatory standards, including to keep pace with continuing changes in information processing technology, emerging cybersecurity risks and threats, and changes to applicable privacy and security laws, rules and regulations.
Our Health Care Benefits products are highly regulated, particularly those that serve Public Exchange, Medicare, Medicaid, dual eligible, dual eligible special needs and small group Commercial customers and members.
Our Health Care Benefits products are highly regulated, particularly those that serve Medicare, Medicaid, dual eligible, dual eligible special needs and small group Commercial customers and members.
Winning bids for Medicaid and dual eligible programs often are challenged successfully by unsuccessful bidders, and may also be withdrawn or cancelled by the issuing agency.
Winning bids for Medicaid and dual eligible programs often are challenged successfully by unsuccessful bidders, and may also be withdrawn or canceled by the issuing agency.
The laws and regulations governing participation in Public Exchange, Medicare Advantage (including dual eligible special needs plans), Medicare Part D, Medicaid, and Managed Medicaid plans are complex, are subject to interpretation and can expose us to penalties for non-compliance.
The laws and regulations governing participation 43 in Medicare Advantage (including dual eligible special needs plans), Medicare Part D, Medicaid, and Managed Medicaid plans are complex, are subject to interpretation and can expose us to penalties for non-compliance.
Executive orders covering health care and other subjects including immigration, AI, energy and the federal work force as well as the work force of public and private companies, if implemented through agency action, may also impact the Company.
Executive orders covering health care and other subjects including immigration, AI, energy and the federal workforce as well as the workforce of public and private companies, if implemented through agency action, may also impact the Company.
These investigations have resulted in enforcement actions against companies in our industry and brokers and agents marketing and selling those companies’ products. These investigations and enforcement actions could result in penalties and the imposition of corrective action plans and/or changes to industry practices, which could adversely affect our ability to market our products. Specifically, CMS, U.S.
These investigations have resulted in enforcement actions against companies in our industry and brokers and agents marketing and selling those companies’ products. These investigations and enforcement actions could result in penalties and the imposition of corrective action plans and/or changes to industry practices, which could adversely affect our ability to market our products.
We can provide no assurance that we or our vendors will be able to detect, prevent or contain the effects of such attacks or other information security (including cybersecurity) risks or threats in the future. We and our vendors have experienced diverse cyberattacks and expect to continue to experience cyberattacks going forward.
We and our vendors have experienced and continue to experience cyberattacks. We can provide no assurance that we or our vendors will be able to detect, prevent or contain the effects of such attacks or other information security (including cybersecurity) risks or threats in the future.
The U.S. federal government and our other government customers also may reduce funding for health care or other programs, cancel or decline to renew contracts with us, or make changes that adversely affect the number of persons eligible for certain programs, the services provided to enrollees in such programs, our premiums and our administrative and health care and other benefit costs, any of which could have a material adverse effect on our businesses, operating results and cash flows.
The U.S. federal government and our other government customers also may reduce funding for health care or other programs, or make changes that adversely affect the number of persons eligible for certain programs, the services provided to enrollees in such programs, our premiums and our administrative and health care and other benefit costs, any of which could have a material adverse effect on our businesses, operating results and cash flows.
We may pursue acquisitions, joint ventures, strategic alliances and other inorganic growth opportunities, as well as strategic divestitures, which may be unsuccessful, cause us to assume unanticipated liabilities, disrupt our existing businesses, be dilutive or lead us to assume significant debt, among other things. 54 We may pursue acquisitions, joint ventures, strategic alliances and other inorganic growth opportunities, as well as strategic divestitures, as part of our business strategy.
We may pursue acquisitions, joint ventures, strategic alliances and other inorganic growth opportunities, as well as strategic divestitures, which may be unsuccessful, cause us to assume unanticipated liabilities, disrupt our existing businesses, be dilutive or lead us to assume significant debt, among other things.
It is reasonably possible that our business operations and operating results could be materially adversely affected by legislative, enforcement, regulatory and public policy changes at the federal or state level, including, but not limited to: changes to the regulatory environment for health care and related benefits, including Medicare, Medicare Advantage, the ACA, and related Public Exchange regulations; efforts to amend the ACA and related regulations, including through litigation aimed at challenging the ability to enforce portions of the ACA, such as the preventative services mandate; changes to laws or regulations governing drug reimbursement, pricing, purchasing and/or importation; changes to or adoption of laws or regulations governing PBMs, including those related to network restrictions, 46 formulary management, affiliate reimbursement, contractual guarantees and reconciliations, reimbursement mandates, required reporting, compensation, purchase discount and/or rebate arrangements with drug manufacturers and/or other PBM services; changes to the laws and regulations governing PBMs’, PDPs’ and/or Managed Medicaid organizations’ interactions with government funded health care programs; changes to or adoption of laws and/or regulations relating to claims processing and billing; changes to immigration policies; changes to patent laws; changes with respect to tax and trade policies, tariffs and other government regulations affecting trade between the U.S. and other countries; and other public policy initiatives.
It is reasonably possible that our business operations and operating results could be materially adversely affected by legislative, enforcement, regulatory and public policy changes at the federal or state level, including, but not limited to: changes to the regulatory environment for health care and related benefits, including Medicare, Medicare Advantage, the ACA, and related regulations; changes in the 340B program, including the resumption of the Pilot and any expansion thereof; efforts to amend the ACA and related regulations, including through litigation aimed at challenging the ability to enforce portions of the ACA, such as the preventative services mandate; changes to laws or regulations governing drug reimbursement, pricing, purchasing and/or importation; changes to or adoption of laws or regulations governing PBMs, including those related to prohibiting pharmacy licensure for pharmacies affiliated with a PBM, network restrictions, formulary management, affiliate reimbursement, contractual guarantees and reconciliations, reimbursement mandates, required reporting, compensation, purchase discount and/or rebate arrangements with drug manufacturers and/or other PBM services; changes to the laws and regulations governing PBMs’, PDPs’ and/or Managed Medicaid organizations’ interactions with government funded health care programs; changes to or adoption of laws and/or regulations relating to claims processing and billing; changes to immigration policies; changes to patent laws; changes with respect to tax and trade policies, tariffs and other government regulations affecting trade between the U.S. and other countries; and other public policy initiatives.
Changes in marketplace dynamics or the actions of competitors or manufacturers, including industry consolidation, the emergence of new competitors and strategic alliances, and decisions to exclude us from new narrow or restricted retail pharmacy networks could materially and adversely affect our businesses, operating results, cash flows and/or prospects. Our Health Care Delivery Businesses Face Unique Risks.
Changes in marketplace dynamics or the actions of competitors or manufacturers, including industry consolidation, the emergence of new competitors and strategic alliances, and decisions to exclude us from new narrow or restricted retail pharmacy networks could materially and adversely affect our businesses, operating results, cash flows and/or prospects.
In addition to the integration risks noted above, some other risks we may face with respect to acquisitions and other inorganic growth strategies include: • we may not be able to obtain the required regulatory approval for an acquisition in a timely manner, if at all; • we frequently compete with other firms, some of which may have greater financial and other resources and a greater tolerance for risk, to acquire attractive companies; • the acquired, alliance and/or joint venture businesses may not perform as projected; • the goodwill or other intangible assets established as a result of our acquisitions may be incorrectly valued or may become impaired; • we may assume unanticipated liabilities, including those that were not disclosed to us or which we underestimated; • the acquired businesses, or the pursuit of other inorganic growth strategies, could disrupt or compete with our existing businesses, distract management, result in the loss of key employees, business partners, suppliers and customers, divert resources, result in tax costs or inefficiencies and make it difficult to maintain our current business standards, controls, information technology systems, policies, procedures and performance; • we may finance future acquisitions and other inorganic growth strategies by issuing common stock for some or all of the purchase price, which would dilute the ownership interests of our stockholders; • we may incur significant debt in connection with acquisitions (whether to finance acquisitions or by assuming debt from the businesses we acquire); • a proposed or pending transaction may have a negative effect on the Company’s credit ratings; • we may not have the expertise to manage and profitably grow the businesses we acquire, and we may need to rely on the retention of key personnel and other suppliers of businesses we acquire, which may be difficult or impossible to accomplish; • we may enter into merger or purchase agreements but, due to reasons within or outside our control, fail to complete the related transactions, which could result in termination fees or other penalties that could be material, cause material disruptions to our businesses and operations and adversely affect our brand, reputation, or stock price; • in order to complete an acquisition, we may be required to divest certain portions of our business, for which we may not be able to obtain favorable pricing; • we may be involved in litigation related to mergers or acquisitions, including for matters that occurred prior to the applicable closing, which may be costly to defend and may result in adverse rulings against us that could be material; • announcements related to an acquisition could have an adverse effect on the market price of the Company’s common stock and other securities; and • the integration into our businesses of the businesses and entities we acquire may affect the way in which existing laws and regulations apply to us, including subjecting us to laws and regulations that did not previously apply to us.
Some other risks we may face with respect to acquisitions and other inorganic growth strategies include: • we may not be able to obtain the required regulatory approval for an acquisition in a timely manner, if at all; • the acquired, alliance and/or joint venture businesses may not perform as projected; • the goodwill or other intangible assets established as a result of our acquisitions may be incorrectly valued or may become impaired; • we may assume unanticipated liabilities, including those that were not disclosed to us or which we underestimated; • the acquired businesses, or the pursuit of other inorganic growth strategies, could disrupt or compete with our existing businesses, distract management, result in the loss of key employees, business partners, suppliers and customers, divert 41 resources, result in tax costs or inefficiencies and make it difficult to maintain our current business standards, controls, information technology systems, policies, procedures and performance; • we may finance future acquisitions and other inorganic growth strategies by issuing common stock for some or all of the purchase price, which would dilute the ownership interests of our stockholders; • we may incur significant debt in connection with acquisitions (whether to finance acquisitions or by assuming debt from the businesses we acquire); • a proposed or pending transaction may have a negative effect on the Company’s credit ratings; • we may enter into merger or purchase agreements but, due to reasons within or outside our control, fail to complete the related transactions, which could result in termination fees or other penalties that could be material, cause material disruptions to our businesses and operations and adversely affect our brand, reputation or stock price; • we may be involved in litigation related to mergers or acquisitions, including for matters that occurred prior to the applicable closing, which may be costly to defend and may result in adverse rulings against us that could be material; • announcements related to an acquisition could have an adverse effect on the market price of the Company’s common stock and other securities; and • the integration into our businesses of the businesses and entities we acquire may affect the way in which existing laws and regulations apply to us, including subjecting us to laws and regulations that did not previously apply to us.
Premiums for our Insured Health Care Benefits products, which comprised 94% of our Health Care Benefits segment revenues for 2024, are priced in advance based on our forecasts of health care and other benefit costs during a fixed premium period, which is generally twelve months.
Premiums for our Insured Health Care Benefits products are priced in advance based on our forecasts of health care and other benefit costs during a fixed premium period, which is generally twelve months.
We are exposed to risks relating to the solvency of other insurers. We are subject to assessments under guaranty fund laws existing in all states for obligations of insolvent insurance companies (including long-term care insurers), HMOs, ACA co-ops and other payors to policyholders and claimants.
In addition, we are subject to assessments under guaranty fund laws existing in all states for obligations of insolvent insurance companies (including long-term care insurers), HMOs, ACA co-ops and other payors to policyholders and claimants.
Without including the risk score trend increase, the advance 2026 rates will result in an expected average increase in revenue for the Medicare Advantage industry of 2.23%, though the rates may vary widely depending on the provider group and patient demographics. CMS intends to publish the final 2026 rate announcement no later than April 7, 2025.
Without including the risk score trend increase, the advance 2027 rates will result in an expected average increase in revenue for the Medicare Advantage industry of 0.09%, though the rates may vary widely depending on the provider group and patient demographics. CMS intends to publish the final 2027 rate announcement no later than April 6, 2026.
The factors described above may adversely affect our ability to predict and manage health care and other benefit costs, which can adversely affect our competitiveness and operating results. 38 Furthermore, if we are not able to accurately and promptly anticipate and detect medical cost trends or accurately estimate the cost of incurred but not yet reported claims or reported claims that have not been paid, our ability to take timely corrective actions to limit future health care costs and reflect our current benefit cost experience in our pricing process may be limited, which would further amplify the extent of any adverse impact on our operating results.
Furthermore, if we are not able to accurately and promptly anticipate and detect medical cost trends or accurately estimate the cost of incurred but not yet reported claims or reported claims that have not been paid, our ability to take timely corrective actions to limit future health care costs and reflect our current benefit cost experience in our pricing process may be limited, which would further amplify the extent of any adverse impact on our operating results.
As states increase their reliance on encounter data, and some states mandate that certain amounts be included or excluded from encounter data, these difficulties could affect the Medicaid premium rates we receive and how Medicaid membership is assigned to us, which could have a material adverse effect on our Medicaid operating results and cash flows and/or our ability to bid for, and continue to participate in, certain Medicaid programs. • If we fail to report and correct errors discovered through our own auditing procedures or during a CMS audit or otherwise fail to comply with the applicable laws and regulations, we could be subject to fines, civil monetary penalties or other sanctions, including fines and penalties under the False Claims Act, which could have a material adverse effect on our ability to participate in Medicare Advantage, Medicare Part D or other government programs, and on our operating results, cash flows and financial condition. • The resumption of Medicaid eligibility redeterminations after being suspended during the COVID-19 pandemic has negatively impacted the number of members eligible for the Company’s Medicaid plans, which could impact our operating results and cash flows from the Medicaid business. • Certain of our Medicaid contracts require the submission of complete and correct encounter data.
As states increase their reliance on encounter data, and some states mandate that certain amounts be included or excluded from encounter data, these difficulties could affect the Medicaid premium rates we receive and how Medicaid membership is assigned to us, which could have a material adverse effect on our Medicaid operating results and cash flows and/or our ability to bid for, and continue to participate in, certain Medicaid programs. • If we fail to report and correct errors discovered through our own auditing procedures or during a CMS audit or otherwise fail to comply with the applicable laws and regulations, we could be subject to fines, civil monetary penalties or other sanctions, including fines and penalties under the False Claims Act, which could have a material adverse effect on our ability to participate in Medicare Advantage, Medicare Part D or other government programs, and on our operating results, cash flows and financial condition. • Certain of our Medicaid contracts require the submission of complete and correct encounter data.
Based on CMS’ notice, Medicare Advantage rates resulted in an expected average increase in revenue for the Medicare Advantage industry of 3.70%, which includes a risk score trend increase of 3.86%. Risk scores vary among Medicare Advantage plans depending on the specific population served, so this increase does not represent an actual guaranteed payment increase.
Based on CMS’ notice, Medicare Advantage rates resulted in an expected average increase in revenue for the Medicare Advantage industry of 7.16%, which includes a risk score trend increase of 2.10%. Risk scores vary among Medicare Advantage plans depending 45 on the specific population served, so this increase does not represent an actual guaranteed payment increase.
During periods when health care and other benefit costs, utilization and/or medical costs trends experience significant volatility and medical claim submission patterns are changing rapidly, as they did during the COVID-19 pandemic, accurately detecting, forecasting, managing, reserving and pricing for our (and our self-insured customers’) medical cost trends and incurred and future health care and other benefits costs is more challenging.
During periods when health care and other benefit costs, utilization and/or medical costs trends experience significant volatility and medical claim submission patterns are changing rapidly, accurately detecting, forecasting, managing, reserving and pricing for our (and our self-insured customers’) medical cost trends and incurred and future health care and other benefit costs is more challenging.
To maximize our overall enterprise value, our various businesses need to collaborate effectively. Our businesses need to be aligned to carry out our business strategy, prioritize goals and coordinate the design of new products intended to utilize the offerings of multiple businesses, including implementing our transformation and enterprise modernization programs.
Our businesses need to be aligned to carry out our business strategy, prioritize goals and coordinate the design of new products intended to utilize the offerings of multiple businesses, including implementing our transformation and enterprise modernization programs.
The Company’s long-term debt ratings are currently investment grade, though each of the ratings organizations reviews our ratings periodically and there can be no assurance that our current ratings will be maintained in the future. In August 2024, Moody’s Investor Service, Inc.
The Company’s long-term debt ratings are currently investment grade, though each of the ratings organizations reviews our ratings periodically and there can be no assurance that our current ratings will be maintained in the future.
Without including the risk score trend increase, the 2025 rates result in an expected average decrease in revenue for the Medicare Advantage industry of 0.16%, though the rates may vary widely depending on the provider group and patient demographics. On January 10, 2025, CMS issued an advance notice detailing proposed 2026 Medicare Advantage payment rates.
Without including the risk score trend increase, the 2026 rates result in an expected average increase in revenue for the Medicare Advantage industry of 5.06%, though the rates may vary widely depending on the provider group and patient demographics. On January 26, 2026, CMS issued an advance notice detailing proposed 2027 Medicare Advantage payment rates.
Adverse conditions in the U.S. and global capital markets can significantly and adversely affect the value of our investments in debt and equity securities, mortgage loans, alternative investments and other investments, and our operating results and/or our financial condition. The U.S. and global capital markets, including credit markets, continue to experience volatility and uncertainty.
Adverse conditions in the U.S. and global capital markets can significantly and adversely affect the value of our investments in debt and equity securities, mortgage loans, alternative investments and other investments, and our operating results and/or our financial condition.
While this consolidation could increase efficiency and has the potential to improve the delivery of health care services, it also reduces competition and the number of potential contracting parties in certain geographies and sectors of the health care industry.
Hospitals, other health care providers and health systems continue to consolidate across the health care industry. While this consolidation could increase efficiency and has the potential to improve the delivery of health care services, it also reduces competition and the number of potential contracting parties in certain geographies and sectors of the health care industry.
We also serve, and expect to grow our business with, government-sponsored programs, including Medicare and Medicaid, that are subject to competitive bids and have lower profit margins than our Commercial Insured Health Care Benefits products.
We also serve, and expect to grow our business with, government-sponsored programs, including Medicare and Medicaid, that are subject to competitive bids, have lower profit margins than our Commercial Insured Health Care Benefits products and may introduce volatility in our cash flows from time to time.
The 2026 Medicare Advantage rates, if finalized as proposed, will result in an expected average increase in revenue for the Medicare Advantage industry of 4.33%, which includes a risk score trend increase of 2.10%.
The 2027 Medicare Advantage rates, if finalized as proposed, will result in an expected average increase in revenue for the Medicare Advantage industry of 2.54%, which includes a risk score trend increase of 2.45%.
Many of these proceedings seek substantial damages which may not be covered by insurance. • We frequently are subject to regular and special governmental audits, investigations and reviews that could result in changes to our business practices and also could result in material refunds, fines, penalties, civil liabilities, criminal liabilities and other sanctions. • Our risk profile is changing as we offer new products and services and expand in business areas beyond our historical businesses, and we may face increased regulatory risks related to our vertical integration strategy. • We face unique regulatory and other challenges in our PBM, Public Exchange, Medicare and Medicaid businesses. • Programs funded in whole or in part by the U.S. federal government account for a significant portion of our revenues. • We may not be able to obtain adequate premium rate increases in our Insured Health Care Benefits products, MBRs and operating results, which could magnify the adverse impact of increases in health care and other benefit costs and of ACA assessments, fees and taxes. • Minimum MLR rebate requirements limit the level of margin we can earn in our Insured Health Care Benefits products while leaving us exposed to higher than expected medical costs.
Many of these proceedings seek substantial damages which may not be covered by insurance. • We frequently are subject to regular and special governmental audits, investigations and reviews that could result in changes to our business practices and also could result in material refunds, fines, penalties, civil liabilities, criminal liabilities and other sanctions. • We may face increased regulatory risks related to our vertical integration strategy, such as legislation prohibiting state licensure of pharmacies affiliated with a PBM. • We face unique regulatory and other challenges in our PBM, Medicare and Medicaid businesses. • Programs funded in whole or in part by the U.S. federal government account for a significant portion of our revenues, and any disruption to funding from the U.S. federal government could adversely impact our revenues and operating results. • We may not be able to obtain adequate premium rate increases in our Insured Health Care Benefits products, which would have an adverse effect on our revenues, MBRs and operating results, and could magnify the adverse impact of increases in health care and other benefit costs and of ACA assessments, fees and taxes. • Minimum MLR rebate requirements limit the level of margin we can earn in our Insured Health Care Benefits products while leaving us exposed to higher than expected medical costs.
These risks are particularly acute during periods when health care and other benefit costs, utilization and/or medical cost trends experience significant volatility and medical claim submission patterns are changing rapidly, as they did during the COVID-19 pandemic.
These risks are particularly acute during 34 periods when health care and other benefit costs, utilization and/or medical cost trends experience significant volatility and medical claim submission patterns are changing rapidly.
Some of our operations are, and are increasingly likely to be, in emerging markets where these risks are heightened. Any measures we may implement to reduce the effect of volatile currencies and other risks on our international operations may not be effective. Risks Associated with Mergers, Acquisitions, and Divestitures We may be unable to successfully integrate companies we acquire.
Some of our operations are, and are increasingly likely to be, in emerging markets where these risks are heightened. Any measures we may implement to reduce the effect of volatile currencies and other risks on our international operations may not be effective.
Our international operations need to meet country-specific legal requirements, including those related to licensing, data privacy, data storage and data protection. 53 Our international operations increase our exposure to, and require us to devote significant management resources to implement controls and systems to comply with, the privacy and data protection laws of non-U.S. jurisdictions, such as the EU’s GDPR, and the anti-bribery, anti-corruption and anti-money laundering laws of the U.S.
Our international operations increase our exposure to, and require us to devote significant management resources to implement controls and systems to comply with, the privacy and data protection laws of non-U.S. jurisdictions, such as the EU’s GDPR, and the anti-bribery, anti-corruption and anti-money laundering laws of the U.S.
Unless we can demonstrate enhanced value to our clients through innovative product and service offerings in the rapidly changing health care industry, we may be unable to remain competitive.
Competition also may come from new entrants and other sources in the future. Unless we can demonstrate enhanced value to our clients through innovative product and service offerings in the rapidly changing health care industry, we may be unable to remain competitive.
As one of the largest national retail, mail order, specialty and LTC pharmacy, PBM and health care and related benefits providers, we frequently are subject to regular and special governmental market conduct and other audits, investigations and reviews by, and we receive subpoenas and other requests for information from, various federal and state agencies, regulatory authorities, Attorneys General, committees, subcommittees and members of the U.S.
As one of the largest health care companies in the nation, we frequently are subject to regular and special governmental market conduct and other audits, investigations and reviews by, and we receive subpoenas and other requests for information from, various federal and state agencies, regulatory authorities, Attorneys General, committees, subcommittees and members of the U.S.
If indicators of impairment are present, the Company first compares the carrying amount of the asset group to the estimated future cash flows associated with the asset group (undiscounted). If the estimated future cash flows used in this analysis are less than the carrying amount of the asset group, an impairment loss calculation is prepared.
If the estimated future cash flows used in this analysis are less than the carrying amount of the asset group, an impairment loss calculation is prepared. The impairment loss calculation compares the carrying amount of the asset group to the asset group’s estimated future cash flows (discounted).
If our current suppliers were to stop selling prescription drugs to us or delay delivery, including as a result of supply shortages, supplier production disruptions, supplier quality issues, closing or bankruptcies of our suppliers, or for other reasons, we may be unable to procure alternatives from other suppliers in a timely and efficient manner and on acceptable terms, or at all.
If our current suppliers were to stop selling prescription drugs to us or delay delivery, including as a result of supply shortages, supplier production disruptions, supplier quality issues, closing or bankruptcies of our suppliers, or for other reasons, we may be unable to procure alternatives from other suppliers in a timely and efficient manner and on acceptable terms, or at all. 55 Table of Contents Our operating results may be adversely affected if we are unable to contract with providers on competitive terms and develop and maintain attractive networks with high quality providers.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeGovernance Management has responsibility to manage risk and bring to the Board’s attention the most material near-term and long-term risks to the Company. The Company’s CISO leads management’s assessment and management of cybersecurity risk. The CISO reports to the Company’s Chief Digital, Data, Analytics & Technology Officer (the “CDDATO”), who reports directly to the Company’s Chief Executive Officer.
Biggest changeSee “Item 1A. Risk Factors” for more information on the Company’s cybersecurity-related risks. Governance Management has responsibility to manage risk and bring to the Board’s attention the most material near-term and long-term risks to the Company. The Company’s CISO leads management’s assessment and management of cybersecurity risk.
The steps the Company takes to reduce its vulnerability and to mitigate the impacts from cybersecurity incidents include, but are not limited to: comprehensive information security policies and standards, implementing logical and technical controls through processes and technologies, monitoring its information technology systems for cybersecurity threats, assessing cybersecurity risk profiles of key third-parties, implementing cybersecurity training and collaborating with public and private organizations on cyber threat information 63 Table of Contents and best practices.
The steps the Company takes to reduce its vulnerability and to mitigate the impacts from cybersecurity incidents include, but are not limited to: comprehensive information security policies and standards, implementing logical and technical controls through processes and technologies, monitoring its information technology systems for cybersecurity threats, assessing cybersecurity risk profiles of key third 56 Table of Contents parties, implementing cybersecurity training and collaborating with public and private organizations on cyber threat information and best practices.
The CDDATO, CISO and the CPO, regularly review cybersecurity matters with management. The current CDDATO, CISO and CPO each has more than 10 years of experience managing risks or advising on cybersecurity issues.
The CISO reports to the Company’s Chief Experience and Technology Officer (the “CETO”), who reports directly to the Company’s Chief Executive Officer. The CETO, CISO and the CPO, regularly review cybersecurity matters with management. The current CETO, CISO and CPO each has more than 10 years of experience managing risks or advising on cybersecurity issues.
The Company annually purchases a cybersecurity risk insurance policy that is expected to help defray the costs associated with a covered cybersecurity incident if it occurred. Although the Company did not experience a material cybersecurity incident during the year ended December 31, 2024, it did experience previously-disclosed impacts from the Change Healthcare cybersecurity incident in February 2024.
The Company annually purchases a cybersecurity risk insurance policy that is expected to help defray the costs associated with a covered cybersecurity incident if it occurred. Although the Company did not experience a material cybersecurity incident during the year ended December 31, 2025, the scope and impact of any future direct or third-party cybersecurity incident cannot be predicted.
The Board has delegated the responsibility for the oversight of the Company’s cybersecurity risks to the Audit Committee. As part of this oversight, the Audit Committee reviews the Company’s cybersecurity program periodically, and at least annually.
The Board has delegated the responsibility for the oversight of the Company’s cybersecurity risks to the Audit Committee. As part of its risk oversight responsibilities, the Audit Committee conducts regular reviews of the Company’s cybersecurity program, including no fewer than two formal updates each year.
The Company’s CDDATO and CISO update the Audit Committee periodically, and at least annually, and the full Board as needed, on the Company’s cybersecurity program, including particular cybersecurity threats, incidents and new developments in the Company’s risk profile.
The Company’s CETO and CISO provide the Audit Committee with recurring briefings—at least on a bi-quarterly basis—and update the full Board annually on the Company’s cybersecurity posture. These updates include assessments of emerging cyber threats, significant cybersecurity incidents and material changes in the Company’s risk profile.
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See the Company’s Form 10-Q for the three months ended March 31, 2024 for more information. The scope and impact of any future direct or third-party cybersecurity incident cannot be predicted. See “Item 1A. Risk Factors” for more information on the Company’s cybersecurity-related risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Health Services segment also owns or leases office space used for administration, sales and marketing, technology and development and professional services throughout the U.S. and in Ireland. Pharmacy & Consumer Wellness Segment As of December 31, 2024, the Pharmacy & Consumer Wellness segment operated the following properties: • More than 7,000 retail stores, of which approximately 4% were owned.
Biggest changePharmacy & Consumer Wellness Segment As of December 31, 2025, the Pharmacy & Consumer Wellness segment operated the following properties: • More than 7,000 retail stores, of which approximately 4% were owned.
Health Care Benefits Segment The Health Care Benefits segment’s principal office is an owned building complex located in Hartford, Connecticut, which totals approximately 1.7 million square feet. The Health Care Benefits segment also owns or leases office space in other locations in the U.S. and several other countries.
Health Care Benefits Segment The Health Care Benefits segment’s principal office is an owned building complex located in Hartford, Connecticut, which totals approximately 1.7 million square feet. The Health Care Benefits segment also owns or leases office space in other locations in the U.S. and other countries.
In connection with certain business dispositions completed between 1995 and 1997, the Company continues to guarantee lease obligations for 61 former stores. The Company is indemnified for these guarantee obligations by the respective initial purchasers.
In connection with certain business dispositions completed between 1995 and 1997, the Company continues to guarantee lease obligations for 60 former stores. The Company is indemnified for these guarantee obligations by the respective initial purchasers.
Item 2. Properties. The Company’s principal office is an owned building complex located in Woonsocket, Rhode Island, which totals approximately one million square feet. The Company also leases office space in other locations in the U.S.
Item 2. Properties. The Company’s principal office is an owned building complex located in Woonsocket, Rhode Island, which totals approximately one million square feet. The Company also leases office space in other locations in the United States.
Net selling space for retail stores was approximately 72.6 million square feet as of December 31, 2024. • Approximately 1,860 retail pharmacies within retail chains, as well as approximately 30 clinics in Target Corporation (“Target”) stores; • Owned distribution centers and leased distribution facilities throughout the U.S. totaling approximately 10.1 million square feet; • Branches for compounding, specialty infusion and enteral nutrition services throughout the U.S.; and • Owned and leased LTC pharmacies throughout the U.S. and an owned LTC repackaging facility.
Net selling space for retail stores was approximately 71.3 million square feet as of December 31, 2025. • Approximately 1,870 retail pharmacies within retail chains, as well as approximately 30 clinics in Target Corporation (“Target”) stores; • Owned distribution centers and leased distribution facilities throughout the U.S. totaling approximately 10.0 million square feet; and • Branches for compounding, specialty infusion and enteral nutrition services throughout the U.S.
Health Services Segment The Health Services segment includes owned or leased mail service dispensing pharmacies, call centers, on-site pharmacy stores, retail specialty pharmacy stores, specialty mail service pharmacies and primary care centers. 64 Table of Contents The Health Services segment leases 239 primary care centers across 27 states, totaling approximately 2.2 million square feet.
Health Services Segment The Health Services segment includes owned or leased mail service dispensing pharmacies, call centers, on-site pharmacy stores, retail specialty pharmacy stores, specialty mail service pharmacies and primary care centers.
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The Health Services segment leases 246 primary care centers across 27 states, totaling approximately 2.2 million square feet. 57 Table of Contents The Health Services segment also owns or leases office space used for administration, sales and marketing, technology and development and professional services throughout the U.S. and in Ireland.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeDavid Joyner , age 60, President and Chief Executive Officer of CVS Health Corporation since October 2024; Executive Vice President of CVS Health Corporation and President of Pharmacy Services from January 2023 through October 2024; Strategic Business Advisor to gWell, Inc., a wellness technology company, from July 2021 through September 2023; Advisor to Podimetrics Inc., a health care company focused on the identification and treatment of diabetic foot ulcers from September 2020 through January 2023; Advisory Council to the Rawls College of Business of Texas Tech University since July 2020; Executive Vice President – Sales and Account Services, CVS Caremark for CVS Health Corporation from March 2011 through December 2019.
Biggest changeJoyner was most recently the Executive Vice President of CVS Health Corporation and President of Pharmacy Services from January 2023 through October 2024; Strategic Business Advisor to gWell, Inc., a wellness technology company, from July 2021 through September 2023; and Advisor to Podimetrics Inc., a health care company focused on the identification and treatment of diabetic foot ulcers from September 2020 through January 2023.
Item 4. Mine Safety Disclosures. Not applicable. 65 Table of Contents Information about our Executive Officers The following sets forth the name, age and biographical information for each of the Registrant’s executive officers as of February 12, 2025.
Item 4. Mine Safety Disclosures. Not applicable. 58 Table of Contents Information about our Executive Officers The following sets forth the name, age and biographical information for each of the Registrant’s executive officers as of February 10, 2026.
Nelson , age 66, Executive Vice President and President, Aetna of CVS Health Corporation since November 2024; Chief Executive Officer, ChenMed LLC (“ChenMed”), a health care provider focused on senior citizens, from February 2024 through August 2024; President, ChenMed, from August 2023 through January 2024; President, JenCare Senior Medical Center, a ChenMed company, from September 2022 through August 2023; Co-Chairman and Chief Executive Officer of Duly Health and Care, a large multispecialty independent provider group, from July 2020 through September 2022.
Nelson was most recently the Chief Executive Officer of ChenMed LLC (“ChenMed”), a health care provider focused on senior citizens, from February 2024 through August 2024; President of ChenMed, from August 2023 through January 2024; President of JenCare Senior Medical Center, a ChenMed company, from September 2022 through August 2023; and Co-Chairman and Chief Executive Officer of Duly Health and Care, a large multispecialty independent provider group, from July 2020 through September 2022.
Shah , age 45, Executive Vice President and Group President of CVS Health Corporation since November 2024; Executive Vice President and Chief Pharmacy Officer of CVS Health Corporation from November 2021 through November 2024 and President or Co-President of Retail from January 2022 through November 2024; Executive Vice President, Specialty and Product Innovation, CVS Caremark from August 2018 through November 2021; Vice President - Specialty Pharmacy, CVS Caremark from February 2013 through July 2018. 66 Table of Contents PART II
Shah was most recently the Executive Vice President and Chief Pharmacy Officer of CVS Health Corporation from November 2021 through November 2024 and President or Co-President of Retail from January 2022 through November 2024. Mr. Shah was the Executive Vice President, Specialty and Product Innovation, CVS Caremark from August 2018 through November 2021. 59 Table of Contents PART II
Capozzi , age 55, Executive Vice President and Chief People Officer of CVS Health Corporation since September 2024; Executive Vice President and Global Chief People Officer of McDonald’s Corporation from April 2020 through August 2024; Senior Vice President and Chief Human Resources Officer of The Boeing Company from April 2016 through April 2020. James D.
Capozzi , age 56, has been the Executive Vice President and Chief People Officer of CVS Health Corporation since September 2024. Prior to joining the Company, Ms. Capozzi was most recently the Executive Vice President and Global Chief People Officer of McDonald’s Corporation from April 2020 through August 2024. James D.
Tilak Mandadi , age 61, Executive Vice President, Ventures and Chief Digital, Data, Analytics and Technology Officer of CVS Health Corporation since July 2022; Chief Strategy Officer, MGM Resorts International from July 2021 through July 2022; Executive Vice President, Digital & Global Chief Technology Officer, Disney Parks, Experiences and Products from March 2013 through July 2021. Steven H.
Mandadi was most recently the Chief Strategy Officer of MGM Resorts International from July 2021 through July 2022 and the Executive Vice President, Digital & Global Chief Technology Officer of Disney Parks, Experiences and Products, a division of The Walt Disney Company, from March 2013 through July 2021. Steven H.
Samrat S. Khichi , age 57, Executive Vice President, Chief Policy Officer and General Counsel of CVS Health Corporation since February 2023; Executive Vice President, Corporate Development, Public Policy, Regulatory Affairs and General Counsel of Becton Dickinson Company (“BD”), a global medical technology company, from December 2017 through February 2023; Senior Vice President, General Counsel and Secretary of C.R.
Khichi was most recently the Executive Vice President, Corporate Development, Public Policy, Regulatory Affairs and General Counsel of Becton Dickinson Company, a global medical technology company, from December 2017 through February 2023.
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Clark , age 60, Senior Vice President - Controller and Chief Accounting Officer of CVS Health Corporation since November 2018; Vice President - Finance and Accounting of CVS Pharmacy, Inc. from September 2009 through October 2018. Thomas F.
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Clark , age 61, has been the Senior Vice President, Controller and Chief Accounting Officer of CVS Health Corporation since November 2018. Prior to joining the Company, Mr. Clark was a partner at Deloitte & Touche LLP, an independent registered public accounting firm.
Removed
Cowhey , age 52, Executive Vice President and Chief Financial Officer of CVS Health Corporation since January 2024; Senior Vice President and Interim Chief Financial Officer of CVS Health Corporation from October 2023 through January 2024; Senior Vice President, Corporate Finance of CVS Health Corporation from September 2023 through October 2023; Senior Vice President, Capital Markets of CVS Health Corporation from February 2022 through September 2023; and Executive Vice President and Chief Financial Officer of Surgical Partners, a large independent operator of short-stay surgical facilities, from April 2018 through February 2022.
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Amy Compton-Philips , age 62, has been the Executive Vice President and Chief Medical Officer of CVS Health Corporation since May 2025. Prior to joining the Company, Dr.
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Roger N. Farah , age 72, Executive Chair of the Board CVS Health Corporation since October 2024; Chair of the Board of CVS Health Corporation since May 2022; Director of CVS Health Corporation since November 2018; and Director of Aetna, Inc. from June 2007 through November 2018.
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Compton-Philips was most recently the Chief Physician Executive of Press Ganey, a health care company known for developing and distributing patient satisfaction surveys, from September 2022 to April 2025 and the Chief Clinical Officer of Providence Health System, responsible for clinical operation, quality, pharmacy and clinical institutes from August 2015 to September 2022. J.
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He also currently serves as a director of The Progressive Corporation, an auto insurance company, and formerly served as Chairman of the Board and a director of Tiffany & Co. until January 2021, and as a director of Metro Bank PLC until March 2020. J.
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David Joyner , age 61, has been the President and Chief Executive Officer of CVS Health Corporation since October 2024, and Chair of the Board of Directors of CVS Health Corporation since January 2026. Prior to his current role with the Company, Mr.
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Bard, a medical technology company that was acquired from BD, from July 2014 through December 2017.
Added
Mr. Joyner has also served on the Advisory Council to the Rawls College of Business of Texas Tech University since July 2020. Samrat S. Khichi , age 58, has been the Executive Vice President, Chief Policy Officer and General Counsel of CVS Health Corporation since February 2023. Prior to joining the Company, Mr.
Added
Tilak Mandadi , age 62, has been the Executive Vice President, Ventures and Chief Experience and Technology Officer of CVS Health Corporation, or held the same role with a different title, since July 2022. Prior to joining the Company, Mr.
Added
Nelson , age 67, has been the Executive Vice President and President, Aetna of CVS Health Corporation since November 2024. Prior to joining the Company, Mr.
Added
Brian O. Newman , age 57, has been the Executive Vice President and Chief Financial Officer of CVS Health Corporation since May 2025. Prior to joining the Company, Mr. Newman was most recently the Executive Vice President and Chief Financial Officer of United Parcel Service, Inc. from September 2019 through May 2024. Prem S.
Added
Shah , age 46, has been the Executive Vice President and Group President of CVS Health Corporation since November 2024. Prior to his current role with the Company, Mr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

13 edited+0 added−4 removed7 unchanged
Biggest changeDuring the years ended December 31, 2024, 2023 and 2022, the Company repurchased an aggregate of 39.7 million shares of common stock for approximately $3.0 billion, an aggregate of 22.8 million shares of common stock for approximately $2.0 billion and an aggregate of 34.1 million shares of common stock for approximately $3.5 billion, respectively, each pursuant to the 2021 Repurchase Program.
Biggest changeDuring the years ended December 31, 2024 and 2023, the Company repurchased an aggregate of 39.7 million shares of common stock for approximately $3.0 billion and an aggregate of 22.8 million shares of common stock for approximately $2.0 billion, respectively, each pursuant to the 2021 Repurchase Program. This activity includes the share repurchases under the ASR transactions described below.
Issuer Purchases of Equity Securities The following share repurchase programs have been authorized by the Board: In billions Authorization Date Authorized Remaining as of December 31, 2024 November 17, 2022 (“2022 Repurchase Program”) $ 10.0 $ 10.0 December 9, 2021 (“2021 Repurchase Program”) 10.0 1.5 Each of the share Repurchase Programs was effective immediately and permit the Company to effect repurchases from time to time through a combination of open market repurchases, privately negotiated transactions, accelerated share repurchase (“ASR”) transactions, and/or other derivative transactions.
Issuer Purchases of Equity Securities The following share repurchase programs have been authorized by the Board: In billions Authorization Date Authorized Remaining as of December 31, 2025 November 17, 2022 (“2022 Repurchase Program”) $ 10.0 $ 10.0 December 9, 2021 (“2021 Repurchase Program”) 10.0 1.5 Each of the share Repurchase Programs was effective immediately and permit the Company to effect repurchases from time to time through a combination of open market repurchases, privately negotiated transactions, accelerated share repurchase (“ASR”) transactions, and/or other derivative transactions.
CVS Health Corporation has paid cash dividends every quarter since becoming a public company and expects to maintain its quarterly dividend of $0.665 per share throughout 2025. Future dividends will depend on the Company’s earnings, capital requirements, financial condition and other factors considered relevant by the Board.
CVS Health Corporation has paid cash dividends every quarter since becoming a public company and expects to maintain its quarterly dividend of $0.665 per share throughout 2026. Future dividends will depend on the Company’s earnings, capital requirements, financial condition and other factors considered relevant by the Board.
The ASR was accounted for as an 67 initial treasury stock transaction for $1.6 billion and a forward contract for $0.4 billion. The forward contract was classified as an equity instrument and was recorded within capital surplus.
The ASR was accounted for as an 60 initial treasury stock transaction for $1.6 billion and a forward contract for $0.4 billion. The forward contract was classified as an equity instrument and was recorded within capital surplus.
The graph assumes a $100 investment in shares of CVS Health Corporation’s common stock on December 31, 2019.
The graph assumes a $100 investment in shares of CVS Health Corporation’s common stock on December 31, 2020.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information CVS Health Corporation’s common stock is listed on the New York Stock Exchange under the symbol “CVS.” Dividends During 2024, 2023 and 2022, the quarterly cash dividend was $0.665, $0.605 and $0.55 per share, respectively.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information CVS Health Corporation’s common stock is listed on the New York Stock Exchange under the symbol “CVS.” Dividends The quarterly cash dividend was $0.665 per share in 2025 and 2024 and $0.605 per share in 2023.
See Note 14 ‘‘Shareholders’ Equity’’ included in Item 8 of this 10-K for information regarding CVS Health Corporation’s dividends. Holders of Common Stock As of February 5, 2025, there were 21,818 registered holders of the registrant’s common stock according to the records maintained by the registrant’s transfer agent.
See Note 14 ‘‘Shareholders’ Equity’’ included in Item 8 of this 10-K for information regarding CVS Health Corporation’s dividends. Holders of Common Stock As of February 4, 2026, there were 20,648 registered holders of the registrant’s common stock according to the records maintained by the registrant’s transfer agent.
See Note 14 ‘‘Shareholders’ Equity’’ included in Item 8 of this 10-K for additional information regarding the Company’s share repurchases. 68 Table of Contents Stock Performance Graph The following graph compares the cumulative total shareholder return on CVS Health Corporation’s common stock (assuming reinvestment of dividends) with the cumulative total return on the S&P 500 Index, the S&P 500 Food and Staples Retailing Industry Group Index and the S&P 500 Healthcare Sector Group Index from December 31, 2019 through December 31, 2024.
See Note 14 ‘‘Shareholders’ Equity’’ included in Item 8 of this 10-K for additional information regarding the Company’s share repurchases. 61 Table of Contents Stock Performance Graph The following graph compares the cumulative total shareholder return on CVS Health Corporation’s common stock (assuming reinvestment of dividends) with the cumulative total return on the S&P 500 Index, the S&P 500 Consumer Staples Distribution & Retail Industry Group Index and the S&P 500 Health Care Sector Index from December 31, 2020 through December 31, 2025.
(2) Includes 8 companies (COST, DG, DLTR, KR, SYY, TGT, WBA, WMT). (3) Includes 61 companies. The year-ended values of each investment shown in the preceding graph are based on share price appreciation plus dividends, with the dividends reinvested as of the last business day of the month during which such dividends were ex-dividend.
(2) Includes 7 companies (COST, DG, DLTR, KR, SYY, TGT, WMT). (3) Includes 60 companies. The year-ended values of each investment shown in the preceding graph are based on share price appreciation plus dividends, with the dividends reinvested as of the last business day of the month during which such dividends were ex-dividend. The calculations exclude trading commissions and taxes.
The calculations exclude trading commissions and taxes. Total shareholder returns from each investment can be calculated from the year-end investment values shown beneath the graph.
Total shareholder returns from each investment can be calculated from the year-end investment values shown beneath the graph.
This activity includes the share repurchases under the ASR transactions described below. Pursuant to the authorization under the 2021 Repurchase Program, the Company entered into a $3.0 billion fixed dollar ASR with Morgan Stanley & Co. LLC (“Morgan Stanley”).
Pursuant to the authorization under the 2021 Repurchase Program, the Company entered into a $3.0 billion fixed dollar ASR with Morgan Stanley & Co. LLC.
Both the 2022 and 2021 Repurchase Programs can be modified or terminated by the Board at any time.
Both the 2022 and 2021 Repurchase Programs can be modified or terminated by the Board at any time. During the year ended December 31, 2025, the Company did not repurchase any shares of its common stock.
December 31, 2019 2020 2021 2022 2023 2024 CVS Health Corporation $ 100 $ 95 $ 147 $ 136 $ 119 $ 70 S&P 500 (1) 100 118 152 125 157 197 S&P 500 Food & Staples Retailing Group Index (2) 100 116 146 131 151 204 S&P 500 Health Care Group Index (1) (3) 100 113 143 140 143 147 _____________________________________________ (1) Includes CVS Health Corporation.
December 31, 2020 2021 2022 2023 2024 2025 CVS Health Corporation $ 100 $ 155 $ 143 $ 125 $ 74 $ 137 S&P 500 (1) 100 129 105 133 166 196 S&P 500 Consumer Staples Distribution & Retail Industry Group Index (2) 100 125 112 130 176 191 S&P 500 Health Care Sector Index (1) (3) 100 126 124 126 129 148 _____________________________________________ (1) Includes CVS Health Corporation.
Removed
Pursuant to the authorization under the 2021 Repurchase Program, the Company entered into a $1.5 billion fixed dollar ASR with Barclays Bank PLC.
Removed
Upon payment of the $1.5 billion purchase price on January 4, 2022, the Company received a number of shares of CVS Health Corporation’s common stock equal to 80% of the $1.5 billion notional amount of the ASR or approximately 11.6 million shares, which were placed into treasury stock in January 2022.
Removed
The ASR was accounted for as an initial treasury stock transaction for $1.2 billion and a forward contract for $0.3 billion. The forward contract was classified as an equity instrument and was recorded within capital surplus.
Removed
In February 2022, the Company received approximately 2.7 million shares of CVS Health Corporation’s common stock, representing the remaining 20% of the $1.5 billion notional amount of the ASR, thereby concluding the ASR. These shares were placed into treasury stock and the forward contract was reclassified from capital surplus to treasury stock in February 2022.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

132 edited+25 added−66 removed100 unchanged
Biggest change(2) Intersegment revenue eliminations relate to intersegment revenue generating activities that occur between the Health Care Benefits segment, the Health Services segment, and/or the Pharmacy & Consumer Wellness segment. 76 The following are reconciliations of consolidated operating income (loss) (GAAP measure) to consolidated adjusted operating income (loss), as well as reconciliations of segment GAAP operating income (loss) to segment adjusted operating income (loss): Year Ended December 31, 2024 In millions Health Care Benefits Health Services Pharmacy & Consumer Wellness Corporate/ Other Consolidated Totals Operating income (loss) (GAAP measure) $ (984) $ 6,937 $ 4,770 $ (2,207) $ 8,516 Amortization of intangible assets (1) 1,175 595 253 2 2,025 Net realized capital (gains) losses (2) 97 (289) — 75 (117) Acquisition-related integration costs (3) — — — 243 243 Restructuring charges (4) — — 747 432 1,179 Office real estate optimization charges (5) 19 — 4 7 30 Opioid litigation charges (6) — — — 100 100 Adjusted operating income (loss) $ 307 $ 7,243 $ 5,774 $ (1,348) $ 11,976 Year Ended December 31, 2023 In millions Health Care Benefits Health Services Pharmacy & Consumer Wellness Corporate/ Other Consolidated Totals Operating income (loss) (GAAP measure) $ 3,949 $ 6,842 $ 5,349 $ (2,397) $ 13,743 Amortization of intangible assets (1) 1,177 465 260 3 1,905 Net realized capital losses (2) 402 — 5 90 497 Acquisition-related transaction and integration costs (3) — — — 487 487 Restructuring charges (4) — — — 507 507 Office real estate optimization charges (5) 49 5 — (8) 46 Loss on assets held for sale (7) — — 349 — 349 Adjusted operating income (loss) $ 5,577 $ 7,312 $ 5,963 $ (1,318) $ 17,534 Year Ended December 31, 2022 In millions Health Care Benefits Health Services Pharmacy & Consumer Wellness Corporate/ Other Consolidated Totals Operating income (loss) (GAAP measure) $ 5,270 $ 6,612 $ 3,560 $ (7,488) $ 7,954 Amortization of intangible assets (1) 1,180 167 435 3 1,785 Net realized capital losses (2) 225 — 44 51 320 Office real estate optimization charges (5) 97 2 — 18 117 Opioid litigation charges (6) — — — 5,803 5,803 Loss on assets held for sale (7) 41 — 2,492 — 2,533 Gain on divestiture of subsidiaries (8) (475) — — — (475) Adjusted operating income (loss) $ 6,338 $ 6,781 $ 6,531 $ (1,613) $ 18,037 _____________________________________________ (1) The Company’s acquisition activities have resulted in the recognition of intangible assets as required under the acquisition method of accounting which consist primarily of trademarks, customer contracts/relationships, covenants not to compete, technology, provider networks and value of business acquired.
Biggest change(2) Intersegment revenue eliminations relate to intersegment revenue generating activities that occur between the Health Care Benefits segment, the Health Services segment, and/or the Pharmacy & Consumer Wellness segment. 68 The following are reconciliations of consolidated operating income (GAAP measure) to consolidated adjusted operating income, as well as reconciliations of segment GAAP operating income (loss) to segment adjusted operating income (loss): Year Ended December 31, 2025 In millions Health Care Benefits Health Services Pharmacy & Consumer Wellness Corporate/ Other Consolidated Totals Operating income (loss) (GAAP measure) $ 1,793 $ 220 $ 4,860 $ (2,213) $ 4,660 Amortization of intangible assets (1) 1,155 569 249 3 1,976 Net realized capital (gains) losses (2) (13) (25) — 82 44 Acquisition-related integration costs (3) — — — 117 117 Goodwill impairment (4) — 5,725 — — 5,725 Health Care Delivery clinic closure charge (5) — 83 — — 83 Opioid litigation charge (6) — — — 320 320 Office real estate optimization charges (7) 4 — 2 4 10 Legacy litigation charges (8) — 291 929 — 1,220 Loss on Accountable Care assets (9) — 288 — — 288 Adjusted operating income (loss) $ 2,939 $ 7,151 $ 6,040 $ (1,687) $ 14,443 Year Ended December 31, 2024 In millions Health Care Benefits Health Services Pharmacy & Consumer Wellness Corporate/ Other Consolidated Totals Operating income (loss) (GAAP measure) $ (984) $ 6,937 $ 4,770 $ (2,207) $ 8,516 Amortization of intangible assets (1) 1,175 595 253 2 2,025 Net realized capital (gains) losses (2) 97 (289) — 75 (117) Acquisition-related integration costs (3) — — — 243 243 Opioid litigation charge (6) — — — 100 100 Office real estate optimization charges (7) 19 — 4 7 30 Restructuring charges (10) — — 747 432 1,179 Adjusted operating income (loss) $ 307 $ 7,243 $ 5,774 $ (1,348) $ 11,976 Year Ended December 31, 2023 In millions Health Care Benefits Health Services Pharmacy & Consumer Wellness Corporate/ Other Consolidated Totals Operating income (loss) (GAAP measure) $ 3,949 $ 6,842 $ 5,349 $ (2,397) $ 13,743 Amortization of intangible assets (1) 1,177 465 260 3 1,905 Net realized capital losses (2) 402 — 5 90 497 Acquisition-related transaction and integration costs (3) — — — 487 487 Office real estate optimization charges (7) 49 5 — (8) 46 Restructuring charges (10) — — — 507 507 Loss on assets held for sale (11) — — 349 — 349 Adjusted operating income (loss) $ 5,577 $ 7,312 $ 5,963 $ (1,318) $ 17,534 _____________________________________________ (1) The Company’s acquisition activities have resulted in the recognition of intangible assets as required under the acquisition method of accounting which consist primarily of trademarks, customer contracts/relationships, covenants not to compete, technology, provider networks and value of business acquired.
Adjusted operating income is defined as operating income as measured by accounting principles generally accepted in the United States of America (“GAAP”) excluding the impact of amortization of intangible assets, net realized capital gains or losses and other items, if any, that neither relate to the ordinary course of the Company’s business nor reflect the Company’s underlying business performance.
Adjusted operating income is defined as operating income (loss) as measured by accounting principles generally accepted in the United States of America (“GAAP”) excluding the impact of amortization of intangible assets, net realized capital gains or losses and other items, if any, that neither relate to the ordinary course of the Company’s business nor reflect the Company’s underlying business performance.
The amount of the credit-related component is recorded as an allowance for credit losses and recognized in net income, and the amount of the non-credit related component is included in other comprehensive income (loss). The Company analyzes all facts and circumstances believed to be relevant for each investment when performing this analysis, in accordance with applicable accounting guidance.
The amount of the credit-related component is recorded as an allowance for credit losses and recognized in net income, and the amount of the non-credit related component is included in other comprehensive income. The Company analyzes all facts and circumstances believed to be relevant for each investment when performing this analysis, in accordance with applicable accounting guidance.
Accordingly, the Company believes excluding net realized capital gains and losses enhances the Company’s and investors’ ability to compare the Company’s past financial performance with its current performance and to analyze underlying business performance and trends. (3) In 2024, the acquisition-related integration costs relate to the acquisitions of Signify Health and Oak Street Health.
Accordingly, the Company believes excluding net realized capital gains and losses enhances the Company’s and investors’ ability to compare the Company’s past financial performance with its current performance and to analyze underlying business performance and trends. (3) In 2025 and 2024, the acquisition-related integration costs relate to the acquisitions of Signify Health and Oak Street Health.
In assessing the Company’s credit strength, the Company believes that Moody’s, S&P and Fitch considered, among other things, the Company’s capital structure and financial 89 policies, as well as its consolidated balance sheet, its historical acquisition activity and other financial information, including the Company’s expectations for future earnings and cash flows.
In assessing the Company’s credit strength, the Company believes that Fitch, Moody’s and S&P considered, among other things, the Company’s capital structure and financial policies, as well as its consolidated balance sheet, its historical acquisition activity and other financial information, including the Company’s expectations for future earnings and cash flows.
The 96 fair value of the reporting units is estimated using a combination of a discounted cash flow method and a market multiple method. If the net book value (carrying amount) of the reporting unit exceeds its fair value, the reporting unit’s goodwill is considered to be impaired, and an impairment is recognized in an amount equal to the excess.
The fair value of the reporting units is estimated using a combination of a discounted cash flow method and a market multiple method. If the net book value (carrying amount) of the reporting unit exceeds its fair value, the reporting unit’s goodwill is considered to be impaired, and an impairment is recognized in an amount equal to the excess.
The senior notes purchased include: $226 million of its 4.1% senior notes due March 2025, $398 million of its 4.125% senior notes due April 2040, $883 million of its 2.7% senior notes due August 2040, $274 million of its 4.125% senior notes due November 2042, $463 million of its 3.875% senior notes due August 2047 and $351 million of its 4.25% senior notes due April 2050.
The senior notes purchased include: $226 million of its 4.1% senior notes due March 2025, $398 million of its 4.125% senior notes due April 2040, $883 million of its 2.7% senior notes due 79 August 2040, $274 million of its 4.125% senior notes due November 2042, $463 million of its 3.875% senior notes due August 2047 and $351 million of its 4.25% senior notes due April 2050.
The Company’s estimates can be affected by a number of factors, including general economic and regulatory conditions; the risk-free interest rate environment; the Company’s market capitalization; efforts of customers and payers to reduce costs, including their prescription drug costs, and/or increase member co-payments; the continued efforts of competitors to gain market share; consumer spending patterns; and the Company’s ability to achieve its revenue growth projections and execute on its cost reduction initiatives. 2024 Goodwill Impairment Test During the fourth quarter of 2024, the Company performed its required annual impairment test of goodwill.
The Company’s estimates can be affected by a number of factors, including general economic and regulatory conditions; the risk-free interest rate environment; the Company’s market capitalization; efforts of customers and payers to reduce costs, including their prescription drug costs, and/or increase member co-payments; the continued efforts of competitors to gain market share; consumer spending patterns; and the Company’s ability to achieve its revenue growth projections and execute on its cost reduction initiatives. 2025 Goodwill Impairment Test During the fourth quarter of 2025, the Company performed its required annual impairment test of goodwill.
Intangible asset amortization is excluded from the related non- 77 GAAP financial measure because the amortization, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired or the estimated useful life of an intangible asset is revised.
Intangible asset amortization is excluded from the related non-GAAP financial measure because the amortization, unlike the related revenue, is not affected by operations of any particular period unless an intangible asset becomes impaired or the estimated useful life of an intangible asset is revised.
The charge associated with the store impairments was included in the restructuring charges within the Pharmacy & Consumer Wellness segment. Recoverability of Goodwill Goodwill represents the excess of amounts paid for acquisitions over the fair value of the net identifiable assets acquired.
The charge associated with the store impairments was included in the restructuring charges within the Pharmacy & Consumer Wellness segment. 86 Recoverability of Goodwill Goodwill represents the excess of amounts paid for acquisitions over the fair value of the net identifiable assets acquired.
Share Repurchase Programs The following share repurchase programs have been authorized by CVS Health Corporation’s Board of Directors (the “Board”): The following share repurchase programs have been authorized by the Board: In billions Authorization Date Authorized Remaining as of December 31, 2024 November 17, 2022 (“2022 Repurchase Program”) $ 10.0 $ 10.0 December 9, 2021 (“2021 Repurchase Program”) 10.0 1.5 Each of the share Repurchase Programs was effective immediately and permit the Company to effect repurchases from time to time through a combination of open market repurchases, privately negotiated transactions, accelerated share repurchase (“ASR”) transactions, and/or other derivative transactions.
Share Repurchase Programs The following share repurchase programs have been authorized by CVS Health Corporation’s Board of Directors (the “Board”): In billions Authorization Date Authorized Remaining as of December 31, 2025 November 17, 2022 (“2022 Repurchase Program”) $ 10.0 $ 10.0 December 9, 2021 (“2021 Repurchase Program”) 10.0 1.5 Each of the share Repurchase Programs was effective immediately and permit the Company to effect repurchases from time to time through a combination of open market repurchases, privately negotiated transactions, accelerated share repurchase (“ASR”) transactions, and/or other derivative transactions.
The Company maintains capital levels in its operating subsidiaries at or above targeted and/or required capital levels and dividends amounts in excess of these levels to meet liquidity requirements, including the payment of interest on debt and 92 stockholder dividends.
The Company maintains capital levels in its operating subsidiaries at or above targeted and/or required capital levels and dividends amounts in excess of these levels to meet liquidity requirements, including the payment of interest on debt and stockholder dividends.
Key Regulatory Trends and Uncertainties • The Company is exposed to funding and regulation of, and changes in government policy with respect to and/or funding or regulation of, the various Medicare programs in which the Company participates, including changes in the amounts payable to us under those programs and/or new reforms or surcharges on existing programs, including changes to applicable risk adjustment mechanisms. • Legislation and/or regulations seeking to regulate PBM activities in a comprehensive manner have been proposed or enacted in a majority of states and on the federal level.
Regulatory Trends and Uncertainties • The Company is exposed to funding and regulation of, and changes in government policy with respect to and/or funding or regulation of, the various Medicare and Medicaid programs in which the Company participates, including changes in the amounts payable to us under those programs and/or new reforms or surcharges on existing programs, including changes to applicable risk adjustment mechanisms. • Legislation and/or regulations seeking to regulate PBM activities in a comprehensive manner have been proposed or enacted in a majority of states and on the federal level.
Intangible asset amortization excluded from the related non-GAAP financial measure represents the entire amount recorded within the Company’s GAAP financial statements, and the revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure.
Intangible asset amortization excluded from the related non-GAAP 69 financial measure represents the entire amount recorded within the Company’s GAAP financial statements, and the revenue generated by the associated intangible assets has not been excluded from the related non-GAAP financial measure.
The ASR was accounted for as an initial treasury stock transaction for $2.6 billion and a forward contract for $0.4 billion. The forward contract was classified as an equity instrument and was recorded within capital surplus.
The ASR was accounted for as an 80 initial treasury stock transaction for $2.6 billion and a forward contract for $0.4 billion. The forward contract was classified as an equity instrument and was recorded within capital surplus.
For additional information regarding these and other trends and uncertainties, see Item 1A, “Risk Factors” and Part I, Item 1 “Business - Government Regulation.” 75 Segment Analysis The following discussion of segment operating results is presented based on the Company’s reportable segments in accordance with the accounting guidance for segment reporting and is consistent with the segment disclosure in Note 19 ‘‘Segment Reporting’’ included in Item 8 of this 10-K.
For additional information regarding these and other trends and uncertainties, see Item 1A, “Risk Factors” and Part I, Item 1 “Business - Government Regulation.” 67 Segment Analysis The following discussion of segment operating results is presented based on the Company’s reportable segments in accordance with the accounting guidance for segment reporting and is consistent with the segment disclosure in Note 19 ‘‘Segment Reporting’’ included in Item 8 of this 10-K.
This legislative and regulatory activity could adversely affect 74 the Company’s ability to conduct business on commercially reasonable terms and the Company’s ability to standardize its PBM products and services across state lines.
This legislative and regulatory activity could adversely affect the Company’s ability to conduct business on commercially reasonable terms and the Company’s ability to standardize its PBM products and services across state lines.
The credit facilities allow for borrowings at various rates that are dependent, in part, on the Company’s public debt ratings and require the Company to pay a weighted average quarterly facility fee of approximately 0.03%, regardless of usage. As of December 31, 2024 and 2023, there were no borrowings outstanding under any of the Company’s back-up credit facilities.
The credit facilities allow for borrowings at various rates that are dependent, in part, on the Company’s public debt ratings and require the Company to pay a weighted average quarterly facility fee of approximately 0.03%, regardless of usage. As of December 31, 2025 and 2024, there were no borrowings outstanding under any of the Company’s back-up credit facilities.
(7) Customer funds associated with group life and health contracts of approximately $52 million have been excluded from the table above because such funds may be used primarily at the customer’s discretion to offset future premiums and/or for refunds, and the timing of the related cash flows cannot be determined.
(7) Customer funds associated with group life and health contracts of approximately $9 million have been excluded from the table above because such funds may be used primarily at the customer’s discretion to offset future premiums and/or for refunds, and the timing of the related cash flows cannot be determined.
External rating agencies use their own capital models and/or RBC standards when they determine a company’s rating. 93 Critical Accounting Policies The Company prepares the consolidated financial statements in conformity with generally accepted accounting principles, which require management to make certain estimates and apply judgment.
External rating agencies use their own capital models and/or RBC standards when they determine a company’s rating. 83 Critical Accounting Policies The Company prepares the consolidated financial statements in conformity with generally accepted accounting principles, which require management to make certain estimates and apply judgment.
The Company does not believe the restrictions contained in these covenants materially affect its financial or operating flexibility. As of December 31, 2024, the Company was in compliance with all of its debt covenants. Debt Ratings As of December 31, 2024, the Company’s long-term debt was rated “BBB” by Fitch Ratings, Inc. (“Fitch”), “Baa3” by Moody’s Investors Service, Inc.
The Company does not believe the restrictions contained in these covenants materially affect its financial or operating flexibility. As of December 31, 2025, the Company was in compliance with all of its debt covenants. Debt Ratings As of December 31, 2025, the Company’s long-term debt was rated “BBB” by Fitch Ratings, Inc. (“Fitch”), “Baa3” by Moody’s Investors Service, Inc.
The table below does not include future payments of claims to health care providers or pharmacies because certain terms of these payments are not determinable at December 31, 2024 (for example, the timing and volume of future services provided under fee-for-service arrangements and future membership levels for capitated arrangements).
The table below does not include future payments of claims to health care providers or pharmacies because certain terms of these payments are not determinable at December 31, 2025 (for example, the timing and volume of future services provided under fee-for-service arrangements and future membership levels for capitated arrangements).
These estimates can be affected by a number of factors including general economic and regulatory conditions, efforts of third party organizations to reduce their prescription drug costs and/or increased member co-payments, the continued efforts of competitors to gain market share and consumer spending patterns.
These estimates can be affected by a number of factors including general economic and regulatory conditions, efforts of third-party organizations to reduce their prescription drug costs and/or increase member co-payments, the continued efforts of competitors to gain market share and consumer spending patterns.
See Note 1 ‘‘Significant Accounting Policies’’ included in Item 8 of this 10-K for additional information on the Company’s reserving methodology. During 2024 and 2023, the segment observed an increase in completion factors relative to those assumed at the prior year end.
See Note 1 ‘‘Significant Accounting Policies’’ included in Item 8 of this 10-K for additional information on the Company’s reserving methodology. During 2025 and 2024, the segment observed an increase in completion factors relative to those assumed at the prior year end.
Although not all states had adopted these rules at December 31, 2024, at that date each of the Company’s active HMOs had a surplus that exceeded either the applicable state net worth requirements or, where adopted, the levels that would require regulatory action under the NAIC’s RBC rules.
Although not all states had adopted these rules at December 31, 2025, at that date each of the Company’s active HMOs had a surplus that exceeded either the applicable state net worth requirements or, where adopted, the levels that would require regulatory action under the NAIC’s RBC rules.
The Company also serves an estimated more than 36 million people through traditional, voluntary and consumer-directed health insurance products and related services, including expanding Medicare Advantage offerings and a leading standalone Medicare Part D prescription drug plan (“PDP”).
The Company also serves an estimated more than 37 million people through traditional, voluntary and consumer-directed health insurance products and related services, including expanding Medicare Advantage offerings and a leading standalone Medicare Part D prescription drug plan (“PDP”).
Overview of the Corporate/Other Segment The Company presents the remainder of its financial results in the Corporate/Other segment, which primarily consists of: • Management and administrative expenses to support the Company’s overall operations, which include certain aspects of executive management and the corporate relations, legal, compliance, human resources and finance departments, information technology, digital, data and analytics, as well as acquisition-related transaction and integration costs; and • Products for which the Company no longer solicits or accepts new customers such as its large case pensions and long-term care insurance products. 71 Results of Operations The following information summarizes the Company’s results of operations for 2024 compared to 2023.
Overview of the Corporate/Other Segment The Company presents the remainder of its financial results in the Corporate/Other segment, which primarily consists of: • Management and administrative expenses to support the Company’s overall operations, which include certain aspects of executive management and the corporate relations, legal, compliance, human resources and finance departments, information technology, digital, data and analytics, as well as acquisition-related transaction and integration costs; and • Products for which the Company no longer solicits or accepts new customers such as its large case pensions and long-term care insurance products. 64 Results of Operations The following information summarizes the Company’s results of operations for 2025 compared to 2024.
At December 31, 2024, all of the Company’s insurance and HMO subsidiaries were above the RBC level that would require regulatory action. The RBC framework described above for insurers has been extended by the NAIC to health organizations, including HMOs.
At December 31, 2025, all of the Company’s insurance and HMO subsidiaries were above the RBC level that would require regulatory action. The RBC framework described above for insurers has been extended by the NAIC to health organizations, including HMOs.
Also, during 2024 and 2023, the Health Care Benefits segment observed that health care costs for claims with claim incurred dates of three months or less before the financial statement date were lower than previously estimated.
Also, during 2025 and 2024, the Health Care Benefits segment observed that health care costs for claims with claim incurred dates of three months or less before the financial statement date were lower than previously estimated.
The restructuring charges associated with the store impairments are reflected within the Pharmacy & Consumer Wellness segment, other asset impairments and related charges are reflected within the Corporate/Other and Pharmacy & Consumer Wellness segments and corporate workforce optimization costs, including severance and employee-related costs, as well as stock-based compensation changes, are reflected within the Corporate/Other segment.
The restructuring charges associated with the store impairments are reflected within the Pharmacy & Consumer Wellness segment, other asset impairments and related charges are reflected within the Corporate/Other and Pharmacy & Consumer Wellness segments and corporate workforce optimization costs, including severance and employee-related costs, as well as the stock-based compensation charge, are reflected within the Corporate/Other segment.
The Company has four reportable segments: Health Care Benefits, Health Services, Pharmacy & Consumer Wellness and Corporate/Other. The Company’s segments maintain separate financial information, and the Chief Operating Decision Maker (“the CODM”) evaluates the segments’ operating results on a regular basis in deciding how to allocate resources among the segments and in assessing segment performance.
The Company has four reportable segments: Health Care Benefits, Health Services, Pharmacy & Consumer Wellness and Corporate/Other. The Company’s segments maintain separate financial information, and the Chief Operating Decision Maker (the “CODM”) evaluates the segments’ operating results on a regular basis in deciding how to allocate resources among the segments and in assessing segment performance.
At the time of delivery, the Company has performed substantially 94 all of its performance obligations under its client contracts and does not experience a significant level of returns or reshipments.
At the time of delivery, the Company has performed substantially 84 all of its performance obligations under its client contracts and does not experience a significant level of returns or reshipments.
Additionally, net unrealized capital losses on debt securities supporting experience-rated products of $25 million, before tax, have been excluded from the table above.
Additionally, net unrealized capital losses on debt securities supporting experience-rated products of $6 million, before tax, have been excluded from the table above.
In order to help investors assess the aggregate risk, if any, associated with the inventory-related uncertainties discussed above, a ten percent (10%) pre-tax change in estimated inventory losses, which is a reasonably likely change, would increase or decrease the total reserve for estimated inventory losses by approximately $60 million as of December 31, 2024.
In order to help investors assess the aggregate risk, if any, associated with the inventory-related uncertainties discussed above, a ten percent (10%) pre-tax change in estimated inventory losses, which is a reasonably likely change, would increase or decrease the total reserve for estimated inventory losses by approximately $64 million as of December 31, 2025.
The total reserve for estimated inventory losses covered by this critical accounting policy was $600 million and $607 million as of December 31, 2024 and 2023, respectively. Although management believes there is sufficient current and historical information available to record reasonable estimates for estimated inventory losses, it is possible that actual results could differ.
The total reserve for estimated inventory losses covered by this critical accounting policy was $635 million and $600 million as of December 31, 2025 and 2024, respectively. Although management believes there is sufficient current and historical information available to record reasonable estimates for estimated inventory losses, it is possible that actual results could differ.
If either case is true, the Company recognizes a non-credit related impairment, and the cost basis or carrying amount of the debt security is written down to fair value. During the years ended December 31, 2024, 2023 and 2022, the Company recorded yield-related impairment losses on debt securities of $73 million, $152 million and $143 million, respectively.
If either case is true, the Company recognizes a non-credit related impairment, and the cost basis or carrying amount of the debt security is written down to fair value. During the years ended December 31, 2025, 2024 and 2023, the Company recorded yield-related impairment losses on debt securities of $28 million, $73 million and $152 million, respectively.
(5) Payments of other long-term liabilities exclude Separate Accounts liabilities of approximately $3.3 billion because these liabilities are supported by assets that are legally segregated and are not subject to claims that arise out of the Company’s business.
(5) Payments of other long-term liabilities exclude Separate Accounts liabilities of approximately $2.0 billion because these liabilities are supported by assets that are legally segregated and are not subject to claims that arise out of the Company’s business.
For discussion of the Company’s results of operations for 2023 compared to 2022, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 7, 2024.
For discussion of the Company’s results of operations for 2024 compared to 2023, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 12, 2025.
Future dividend payments will depend on the Company’s earnings, capital requirements, financial condition and other factors considered relevant by the Board. 91 Future Cash Requirements The following table summarizes certain estimated future cash requirements under the Company’s various contractual obligations at December 31, 2024, in total and disaggregated into current and long-term obligations.
Future dividend payments will depend on the Company’s earnings, capital requirements, financial condition and other factors considered relevant by the Board. 81 Future Cash Requirements The following table summarizes certain estimated future cash requirements under the Company’s various contractual obligations at December 31, 2025, in total and disaggregated into current and long-term obligations.
The segment has considered the pattern of changes in its completion factors when determining the completion factors used in its estimates of IBNR as of December 31, 2024.
The segment has considered the pattern of changes in its completion factors when determining the completion factors used in its estimates of IBNR as of December 31, 2025.
However, based on historical claim experience, it is reasonably possible that the estimated weighted average completion factors may vary by plus or minus 9 basis points from the assumed rates, which could impact health care costs payable by approximately plus or minus $202 million pretax.
However, based on historical claim experience, it is reasonably possible that the estimated weighted average completion factors may vary by plus or minus 14 basis points from the assumed rates, which could impact health care costs payable by approximately plus or minus $372 million pretax.
When establishing reserves as of December 31, 2024, the segment increased its assumed health care cost trend rates for the most recent three months by 3.4% from health care cost trend rates recently observed.
When establishing reserves as of December 31, 2025, the segment increased its assumed health care cost trend rates for the most recent three months by 4.4% from health care cost trend rates recently observed.
(5) In 2024, 2023 and 2022, the office real estate optimization charges primarily relate to the abandonment of leased real estate and the related right-of-use assets and property and equipment in connection with the Company’s evaluation of corporate office real estate space in response to its ongoing flexible work arrangement.
(7) In 2025, 2024 and 2023, the office real estate optimization charges primarily relate to the abandonment of leased real estate and the related right-of-use assets and property and equipment in connection with the Company’s evaluation of corporate office real estate space in response to its ongoing flexible work arrangement.
(3) Pharmacy network revenues relate to claims filled at retail and specialty retail pharmacies, including the Company’s retail pharmacies and LTC pharmacies, as well as activity associated with Maintenance Choice, which permits eligible client plan members to fill their maintenance prescriptions through mail order delivery or at a CVS pharmacy retail store for the same price as mail order.
(3) Pharmacy network revenues relate to claims filled at retail and specialty retail pharmacies, including pharmacies owned by the Company, as well as activity associated with Maintenance Choice, which permits eligible client plan members to fill their maintenance prescriptions through mail order delivery or at a CVS pharmacy retail store for the same price as mail order.
After considering the claims paid in 2024 and 2023 with dates of service prior to the fourth quarter of the previous year, the segment observed assumed incurred claim weighted average completion factors that were 23 and 4 basis points higher, respectively, than previously estimated, resulting in a decrease of $339 million and $55 million in 2024 and 2023, respectively, in health care costs payable that related to the prior year.
After considering the claims paid in 2025 and 2024 with dates of service prior to the fourth quarter of the previous year, the segment observed assumed incurred claim weighted average completion factors that were 31 and 23 basis points higher, respectively, than previously estimated, resulting in a decrease of $541 million and $339 million in 2025 and 2024, respectively, in health care costs payable that related to the prior year.
The Company believes its operating cash flows, commercial paper program, credit facilities, as well as any potential future borrowings, will be sufficient to fund these future payments and long-term initiatives. As of December 31, 2024, the Company had approximately $8.6 billion in cash and cash equivalents, approximately $3.8 billion of which was held by the parent company or nonrestricted subsidiaries.
The Company believes its operating cash flows, commercial paper program, credit facilities, as well as any potential future borrowings, will be sufficient to fund these future payments and long-term initiatives. As of December 31, 2025, the Company had approximately $8.5 billion in cash and cash equivalents, approximately $2.8 billion of which was held by the parent company or nonrestricted subsidiaries.
The Company has four reportable segments: Health Care Benefits, Health Services, Pharmacy & Consumer Wellness and Corporate/Other, which are described below. Overview of the Health Care Benefits Segment The Health Care Benefits segment operates as one of the nation’s leading diversified health care benefits providers.
The Company has four reportable segments: Health Care Benefits, Health Services, Pharmacy & Consumer Wellness and Corporate/Other, which are described below. Overview of the Health Care Benefits Segment The Health Care Benefits segment operates as one of the nation’s leading diversified health care benefits providers through its Aetna ® operations.
The Company’s 2025 star ratings will be used to determine which of the Company’s Medicare Advantage plans have ratings of four stars or higher and qualify for bonus payments in 2026.
CMS released the Company’s 2026 star ratings in October 2025. The Company’s 2026 star ratings will be used to determine which of the Company’s Medicare Advantage plans have ratings of four stars or higher and qualify for bonus payments in 2027.
(6) Total payments of future policy benefits, unpaid claims and policyholders’ funds include $566 million, $911 million and $137 million, respectively, of reserves for contracts subject to reinsurance. The Company expects the assuming reinsurance carrier to fund these obligations and has reflected these amounts as reinsurance recoverable assets on the consolidated balance sheets.
(6) Total payments of future policy benefits, unpaid claims and policyholders’ funds include $547 million, $761 million and $125 million, respectively, of reserves for contracts subject to reinsurance. The Company expects the assuming reinsurance carrier to fund these obligations and has reflected these amounts as reinsurance recoverable assets on the consolidated balance sheets.
Same store metrics exclude revenues and prescriptions from LTC and infusion services operations. Management uses these metrics to evaluate the performance of existing stores on a comparable basis and to inform future decisions regarding existing stores and new locations.
Same store metrics exclude revenues and prescriptions from infusion services operations and long-term care pharmacies. Management uses these metrics to evaluate the performance of existing stores on a comparable basis and to inform future decisions regarding existing stores and new locations.
(2) Relocated stores are not included in new and acquired stores or closed stores totals. 87 Short-term Borrowings Commercial Paper and Back-up Credit Facilities The Company had $2.1 billion of commercial paper outstanding at a weighted average interest rate of 4.98% as of December 31, 2024.
(2) Relocated stores are not included in new and acquired stores or closed stores totals. 78 Short-term Borrowings Commercial Paper and Back-up Credit Facilities The Company did not have any commercial paper outstanding as of December 31, 2025. The Company had $2.1 billion of commercial paper outstanding at a weighted interest rate of 4.98% as of December 31, 2024.
The Company refers to insurance products (where it assumes all or a majority of the risk for medical and dental care costs) as “Insured” and administrative services contract products (where the plan sponsor assumes all or a majority of the risk for medical and dental care costs) as “ASC.” The Company sold Insured plans directly to individual consumers through the individual public health insurance exchanges (“Public Exchanges”) in 17 states as of December 31, 2024.
The Company refers to insurance products (where it assumes all or a majority of the risk for medical and dental care costs) as “Insured” and administrative services contract products (where the plan sponsor assumes all or a majority of the risk for medical and dental care costs) as “ASC.” The Company also sold Insured plans directly to individual consumers through the individual public health insurance exchanges (“Public Exchanges”) through the year ended December 31, 2025.
In connection with this restructuring plan, the Company completed a strategic review of its retail business and determined that it plans to close 271 retail stores in 2025, and, accordingly, it recorded a store impairment charge to write down the associated operating or financing lease right-of-use assets and property and equipment.
In connection with this restructuring plan, the Company completed a strategic review of its retail business and determined that it planned to close additional retail stores in 2025, and, accordingly, it recorded a store impairment charge to write down the associated lease right-of-use assets and property and equipment.
Included in net cash used in investing activities for the years ended December 31, 2024, 2023 and 2022 was the following store development activity: (1) 2024 2023 2022 Total stores (beginning of year) 9,395 9,674 9,939 New and acquired stores (2) 39 39 41 Closed stores (2) (299) (318) (306) Total stores (end of year) 9,135 9,395 9,674 Relocated stores (2) 3 5 4 _____________________________________________ (1) Includes retail drugstores and pharmacies within retail chains, primarily in Target Corporation (“Target”) stores.
Included in net cash used in investing activities for the years ended December 31, 2025, 2024 and 2023 was the following store development activity: (1) 2025 2024 2023 Total stores (beginning of year) 9,135 9,395 9,674 New and acquired stores (2) 87 39 39 Closed stores (2) (243) (299) (318) Total stores (end of year) 8,979 9,135 9,395 Relocated stores (2) 5 3 5 _____________________________________________ (1) Includes retail drugstores and pharmacies within retail chains, primarily in Target Corporation (“Target”) stores.
Under applicable regulatory requirements and undertakings, at December 31, 2024, the maximum amount of dividends that may be paid by the Company’s insurance and HMO subsidiaries without prior approval by regulatory authorities was $1.6 billion in the aggregate.
Under applicable regulatory requirements and undertakings, at December 31, 2025, the maximum amount of dividends that may be paid by the Company’s insurance and HMO subsidiaries without prior approval by regulatory authorities was $3.8 billion in the aggregate.
Same-store metrics provide management and investors with information useful in understanding the portion of current revenues and prescriptions resulting from organic growth in existing locations versus the portion resulting from opening new stores. Commentary - 2024 compared to 2023 Revenues • Total revenues increased $7.7 billion, or 6.6%, in 2024 compared to 2023.
Same-store metrics provide management and investors with information useful in understanding the portion of current revenues and prescriptions resulting from organic growth in existing locations versus the portion resulting from opening new stores. Commentary - 2025 compared to 2024 Revenues • Total revenues increased $14.9 billion, or 11.9%, in 2025 compared to 2024.
There were no impairment losses recognized on indefinite-lived intangible assets in any of the years ended December 31, 2024, 2023 or 2022.
There were no impairment losses recognized on indefinite-lived intangible assets in the years ended December 31, 2025, 2024 or 2023.
The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 ties a portion of each Medicare Advantage plan’s reimbursement to the plan’s “star ratings.” Plans must have a star rating of four or higher (out of five) to qualify for bonus payments. CMS released the Company’s 2025 star ratings in October 2024.
The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively the “ACA”) ties a portion of each Medicare Advantage plan’s reimbursement to the plan’s “star ratings.” Plans must have a star rating of four or higher (out of five) to qualify for bonus payments.
On January 10, 2025, CMS issued an advance notice detailing proposed 2026 Medicare Advantage payment rates. The 2026 Medicare Advantage rates, if finalized as proposed, will result in an expected average increase in revenue for the Medicare Advantage industry of 2.23%, excluding the CMS estimate of Medicare Advantage risk score trend.
On January 26, 2026, CMS issued an advance notice detailing proposed 2027 Medicare Advantage payment rates. The 2027 Medicare Advantage rates, if finalized as proposed, will result in an expected average increase in revenue for the Medicare Advantage industry of 0.09%, excluding the CMS estimate of Medicare Advantage risk score trend.
Dividends During 2024, 2023 and 2022 the quarterly cash dividend was $0.665, $0.605 and $0.55 per share, respectively. CVS Health Corporation has paid cash dividends every quarter since becoming a public company and expects to maintain its quarterly dividend of $0.665 per share throughout 2025.
Dividends The quarterly cash dividend declared by the Board was $0.665 per share in 2025 and 2024 and $0.605 per share in 2023. CVS Health Corporation has paid cash dividends every quarter since becoming a public company and expects to maintain its quarterly dividend of $0.665 per share throughout 2026.
In addition, cash used in investing activities reflected the following activity: • Gross capital expenditures were approximately $2.8 billion and $3.0 billion in 2024 and 2023, respectively.
In addition, cash used in investing activities reflected the following activity: • Gross capital expenditures were approximately $2.8 billion in both 2025 and 2024.
CMS intends to publish the final 2026 rate announcement no later than April 7, 2025.
CMS intends to publish the final 2027 rate announcement no later than April 6, 2026.
Gain on Early Extinguishment of Debt In December 2024, pursuant to a cash tender offer, the Company repaid approximately $2.6 billion of its outstanding senior notes for a cash payment of approximately $2.0 billion.
The net proceeds of these offerings were used for general corporate purposes. Gain on Early Extinguishment of Debt In December 2024, pursuant to a cash tender offer, the Company repaid approximately $2.6 billion of its outstanding senior notes for a cash payment of approximately $2.0 billion.
Medicare Update On April 1, 2024, CMS issued its final notice detailing final 2025 Medicare Advantage payment rates. Final 2025 Medicare Advantage rates resulted in an expected average decrease in revenue for the Medicare Advantage industry of 0.16%, excluding the CMS estimate of Medicare Advantage risk score trend.
Medicare Update On April 7, 2025, CMS issued its final notice detailing final 2026 Medicare Advantage payment rates. Final 2026 Medicare Advantage rates resulted in an expected average increase in revenue for the Medicare Advantage industry of 5.06%, excluding the CMS estimate of Medicare Advantage risk score trend.
Within certain ratio ranges, regulators have increasing authority to take action as the RBC Ratio decreases. There are four levels of regulatory action, ranging from requiring an insurer to submit a comprehensive financial plan for increasing its RBC to the state insurance commissioner to requiring the state insurance commissioner to place the insurer under regulatory control.
There are four levels of regulatory action, ranging from requiring an insurer to submit a comprehensive financial plan for increasing its RBC to the state insurance commissioner to requiring the state insurance commissioner to place the insurer under regulatory control.
As of December 31, 2024, the Company had more than 9,000 retail locations, more than 1,000 walk-in and primary care medical clinics, a leading pharmacy benefits manager with approximately 90 million plan members and expanding specialty pharmacy solutions, and a dedicated senior pharmacy care business serving more than 800,000 patients per year.
As of December 31, 2025, the Company had approximately 9,000 retail locations, more than 1,000 walk-in and primary care medical clinics and a leading pharmacy benefits manager with approximately 87 million plan members and expanding specialty pharmacy solutions.
Operating expenses • Operating expenses in the Health Services segment include selling, general and administrative expenses; and depreciation and amortization expense. • Operating expenses increased $255 million, or 8.6%, in 2024 compared to 2023.
Operating expenses • Operating expenses in the Health Services segment include selling, general and administrative expenses; and depreciation and amortization expense. • Operating expenses increased $787 million, or 24.4%, in 2025 compared to 2024.
The Health Services segment’s clients and customers are primarily employers, insurance companies, unions, government employee groups, health plans, PDPs, Medicaid managed care plans, CMS, plans offered on public and private health insurance exchanges and other sponsors of health benefit plans throughout the U.S., patients who receive care in the Health Services segment’s medical clinics, virtually or in the home, as well as Covered Entities. 70 Overview of the Pharmacy & Consumer Wellness Segment The Pharmacy & Consumer Wellness segment dispenses prescriptions in its retail pharmacies and through its infusion operations, provides ancillary pharmacy services including pharmacy patient care programs, diagnostic testing and vaccination administration, and sells a wide assortment of health and wellness products and general merchandise.
Centers for Medicare & Medicaid Services (“CMS”), plans offered on public and private health insurance exchanges and other sponsors of health benefit plans throughout the U.S., patients who receive care in the Health Services segment’s medical clinics, virtually or in the home, as well as Covered Entities. 63 Overview of the Pharmacy & Consumer Wellness Segment The Pharmacy & Consumer Wellness segment dispenses prescriptions in its CVS Pharmacy ® retail locations and through its infusion operations, provides ancillary pharmacy services including pharmacy patient care programs and vaccination administration, and sells a wide assortment of health and wellness products and general merchandise.
During the years ended December 31, 2024, 2023 and 2022, the Company repurchased an aggregate of 39.7 million shares of common stock for approximately $3.0 billion, an aggregate of 22.8 million shares of common stock for approximately $2.0 billion and an aggregate of 34.1 million shares of common stock for approximately $3.5 billion, respectively, each pursuant to the 2021 Repurchase Program.
During the years ended December 31, 2024 and 2023, the Company repurchased an aggregate of 39.7 million shares of common stock for approximately $3.0 billion and an aggregate of 22.8 million shares of common stock for approximately $2.0 billion, respectively, each pursuant to the 2021 Repurchase Program. This activity includes the share repurchases under the ASR transactions described below.
The fair values of the reporting units 97 with goodwill exceeded their carrying values by significant margins, with the exception of the Health Care Delivery reporting unit, which exceeded its carrying value by approximately 9%. 2022 Goodwill Impairment Test During the third quarter of 2022, the Company performed its required annual impairment test of goodwill.
The fair values of the reporting units with goodwill exceeded their carrying values by significant margins, with the exception of the Government reporting unit and the Health Care Delivery reporting unit which exceeded their carrying values by approximately 4% and 8%, respectively. 2023 Goodwill Impairment Test During the fourth quarter of 2023, the Company performed its required annual impairment test of goodwill.
The results of the impairment tests indicated that there was no impairment of goodwill as of the testing date. The fair values of the reporting units with goodwill exceeded their carrying values by significant margins.
The results of the impairment tests indicated that there was no impairment of goodwill as of the testing date. The fair values of the reporting units with goodwill exceeded their carrying values by significant margins, with the exception of the Health Care Delivery reporting unit, which exceeded its carrying value by approximately 3%.
(4) In 2024, the restructuring charges are primarily comprised of a store impairment charge, corporate workforce optimization costs, including severance and employee-related costs, other asset impairment and related charges associated with the discontinuation of certain non-core assets, and a stock-based compensation charge.
The loss on Accountable Care assets is reflected in operating expenses within the Health Services segment. (10) In 2024, the restructuring charges are primarily comprised of a store impairment charge, corporate workforce optimization costs, including severance and employee-related costs, other asset impairment and related charges associated with the discontinuation of certain non-core assets, and a stock-based compensation charge.
(“Moody’s”) and “BBB” by Standard & Poor’s Financial Services LLC (“S&P”), and its commercial paper program was rated “F2” by Fitch, “P-3” by Moody’s and “A-2” by S&P.
(“Moody’s”) and “BBB” by Standard & Poor’s Financial Services LLC (“S&P”), and its commercial paper program was rated “F2” by Fitch, “P-3” by Moody’s and “A-2” by S&P. The outlook on the Company’s long-term debt is “Negative” by both Fitch and S&P and “Stable” by Moody’s.
This activity includes the share repurchases under the ASR transactions described below. Pursuant to the authorization under the 2021 Repurchase Program, the Company entered into a $3.0 billion fixed dollar ASR with Morgan Stanley & Co. LLC (“Morgan Stanley”).
Pursuant to the authorization under the 2021 Repurchase Program, the Company entered into a $3.0 billion fixed dollar ASR with Morgan Stanley & Co. LLC.
The estimated fair value of the Government reporting unit is also dependent on multiples of market participants in the health insurance industry, as well as the risk-free interest rate environment which impacts the discount rate used in the discounted cash flow method. As of December 31, 2024, the goodwill balance in the Government reporting unit was approximately $21.2 billion.
The estimated fair value of the Health Care Delivery reporting unit is also dependent on multiples of market participants in the care delivery industry, as well as the risk-free interest rate environment which impacts the discount rate used in the discounted cash flow method.
In 2023, the acquisition-related transaction and integration costs relate to the acquisitions of Signify Health and Oak Street Health. The acquisition-related transaction and integration costs are reflected in operating expenses within the Corporate/Other segment.
In 2023, the acquisition-related transaction and integration costs relate to the acquisitions of Signify Health and Oak Street Health. The acquisition-related transaction and integration costs are reflected in operating expenses within the Corporate/Other segment. (4) In 2025, the goodwill impairment charge relates to the Health Care Delivery reporting unit within the Health Services segment.
In connection with its commercial paper program, the Company maintains a $2.5 billion, five-year unsecured back-up revolving credit facility, which expires on May 11, 2027, a $2.5 billion, five-year unsecured back-up revolving credit facility, which expires on May 16, 2028, and a $2.5 billion, five-year unsecured back-up revolving credit facility, which expires on May 16, 2029.
In connection with its commercial paper program, the Company maintains three $2.5 billion, five-year unsecured back-up revolving credit facilities, which expire in May 2028, 2029 and 2030.
On May 9, 2024, following the issuance of the $5.0 billion in senior notes described under “Long-term Borrowings” below, the term loan credit agreement terminated. There were no borrowings under the term loan credit agreement through the date of termination. On May 1, 2023, the Company entered into a 364-day $5.0 billion term loan agreement.
On May 9, 2024, following the issuance of the $5.0 billion in senior notes described under “Long-term Borrowings” below, the term loan credit agreement terminated. There were no borrowings under the term loan credit agreement through the date of termination. Federal Home Loan Bank of Boston (“FHLBB”) A subsidiary of the Company is a member of the FHLBB.
Long-term Borrowings 2024 Notes On December 10, 2024, the Company issued $2.25 billion aggregate principal amount of 7.0% fixed-to-fixed rate series A junior subordinated notes due March 2055 and $750 million aggregate principal amount of 6.75% fixed-to-fixed rate series B junior subordinated notes due December 2054 for total proceeds of approximately $3.0 billion, net of discounts and underwriting fees.
The net proceeds of these offerings were used to repay existing indebtedness, including borrowings under the Company’s commercial paper program, as well as for general corporate purposes. 2024 Notes On December 10, 2024, the Company issued $2.25 billion aggregate principal amount of 7.0% fixed-to-fixed rate series A junior subordinated notes due March 2055 and $750 million aggregate principal amount of 6.75% fixed-to-fixed rate series B junior subordinated notes due December 2054 for total proceeds of approximately $3.0 billion, net of discounts and underwriting fees.
In addition, the Company provides clinical services, disease management services, medical spend management and pharmacy and/or other administrative services for providers and federal 340B drug pricing program covered entities (“Covered Entities”).
PBM solutions include plan design offerings and administration, formulary management, retail pharmacy network management services, and specialty and mail order pharmacy services. In addition, the Company provides clinical services, disease management services, medical spend management and pharmacy and/or other administrative services for providers and federal 340B drug pricing program covered entities (“Covered Entities”).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe assumptions used were as follows: an immediate increase of 100 basis points in interest rates (which the Company believes represents a moderately adverse scenario) for long-term debt issued by the Company, as well as its interest rate sensitive investments and an immediate decrease of 15% in prices for publicly traded domestic equity securities in the Company’s investment portfolio.
Biggest changeThe assumption used was an immediate increase of 100 basis points in interest rates (which the Company believes represents a moderately adverse scenario) for long-term debt issued by the Company, as well as its interest rate sensitive investments.
Net reductions in fair value would be reflected as an unrealized loss in equity, as the Company classifies these debt securities as available for sale, and the effect of the interest rate on interest rate sensitive liabilities is recorded in other comprehensive income (loss).
Net reductions in fair value would be reflected as an unrealized loss in equity, as the Company classifies these debt securities as available for sale, and the effect of the interest rate on interest rate sensitive liabilities is recorded in other comprehensive income.
The Company generally classifies debt securities as available for sale, and carries them at fair value on the consolidated balance sheets. At both December 31, 2024 and 2023, less than 1% of debt securities were valued using inputs that reflect the Company’s assumptions (categorized as Level 3 inputs in accordance with GAAP).
The Company generally classifies debt securities as available for sale, and carries them at fair value on the consolidated balance sheets. At both December 31, 2025 and 2024, less than 1% of debt securities were valued using inputs that reflect the Company’s assumptions (categorized as Level 3 inputs in accordance with GAAP).
Based on overall exposure to interest rate risk and equity price risk, the Company believes that these changes in market rates and prices would not materially affect consolidated near-term financial condition, operating results or cash flows as of December 31, 2024.
Based on overall exposure to interest rate risk and equity price risk, the Company believes that these changes in market rates and prices would not materially affect consolidated near-term financial condition, operating results or cash flows as of December 31, 2025.
These securities had an average credit quality rating of AA+ at both December 31, 2024 and 2023, with the guarantee. These securities had an average credit quality rating of AA and AA- at December 31, 2024 and 2023, respectively, without the guarantee. The Company does not have any significant concentration of investments with third party guarantors (either direct or indirect).
These securities had an average credit quality rating of AA+ at both December 31, 2025 and 2024, with the guarantee and an average credit quality rating of AA+ and AA at December 31, 2025 and 2024, respectively, without the guarantee. The Company does not have any significant concentration of investments with third party guarantors (either direct or indirect).
Evaluation of Foreign Currency and Commodity Risk At December 31, 2024 and 2023, the Company did not have any material foreign currency exchange rate or commodity derivative instruments in place and believes its exposure to foreign currency exchange rate risk is not material. Evaluation of Operational Risks The Company also faces certain operational risks.
Evaluation of Foreign Currency and Commodity Risk At December 31, 2025 and 2024, the Company did not have any material foreign currency exchange rate or commodity derivative instruments in place and believes its exposure to foreign currency exchange rate risk is not material. Evaluation of Operational Risks The Company also faces certain operational risks.
Changes in the fair value of long-term debt do not impact the Company’s operating results or financial condition. • The theoretical reduction in the fair value of interest rate sensitive investments partially offset by the theoretical reduction in the fair value of interest rate sensitive liabilities would result in a net decline in fair value of approximately $650 million ($820 million pretax) related to continuing non-experience-rated products.
Changes in the fair value of long-term debt do not impact the Company’s operating results or financial condition. • The theoretical reduction in the fair value of interest rate sensitive investments partially offset by the theoretical reduction in the fair value of interest rate sensitive liabilities would result in a net decline in fair value of approximately $765 million ($970 million pretax) related to continuing non-experience-rated products.
The amount of the credit-related component is recorded as an allowance for credit losses and recognized in net income, and the amount of the non-credit related component is included in other 100 comprehensive income (loss). The impairment of debt securities is considered a critical accounting policy.
The amount of the credit-related component is recorded as an allowance for credit losses and recognized in net income, and the amount of the non-credit related component is included in other 90 comprehensive income. The impairment of debt securities is considered a critical accounting policy.
Assuming an immediate increase of 100 basis points in interest rates, the theoretical decline in the fair values of market sensitive instruments at December 31, 2024 is as follows: • The fair value of long-term debt issued by the Company would decline by approximately $3.3 billion ($4.1 billion pretax).
Assuming an immediate increase of 100 basis points in interest rates, the theoretical decline in the fair values of market sensitive instruments at December 31, 2025 is as follows: • The fair value of long-term debt issued by the Company would decline by approximately $3.6 billion ($4.6 billion pretax).
The fair value of debt securities that were rated below investment grade (that is, having a credit quality rating below BBB-/Baa3) was $2.4 billion and $2.1 billion at December 31, 2024 and 2023, respectively (of which 1.6% and 1.5% at December 31, 2024 and 2023, respectively, supported experience-rated products).
The fair value of debt securities that were rated below investment grade (that is, having a credit quality rating below BBB-/Baa3) was $2.8 billion and $2.4 billion at December 31, 2025 and 2024, respectively (of which 1.1% and 1.6% at December 31, 2025 and 2024, respectively, supported experience-rated products).
The impact of cyberattacks has not been material to the Company’s operations or operating results through December 31, 2024. The Board and its Audit Committee are regularly informed 101 regarding the Company’s information security policies, practices and status. Please see “Cybersecurity” included in Item 1C of this 10-K for further information. 102 Table of Contents
The impact of cyberattacks has not been material to the Company’s operations or operating results through December 31, 2025. The Board and its Audit Committee are regularly informed regarding the Company’s information security policies, practices and status. Please see “Cybersecurity” included in Item 1C of this 10-K for further information. 91 Table of Contents
The debt securities in the Company’s investment portfolio had an average credit quality rating of A at both December 31, 2024 and 2023, with a fair value of approximately $5.9 billion and $4.6 billion rated AAA at December 31, 2024 and 2023, respectively.
The debt securities in the Company’s investment portfolio had an average credit quality rating of A at both December 31, 2025 and 2024, with a fair value of approximately $6.2 billion and $5.9 billion rated AAA at December 31, 2025 and 2024, respectively.
At December 31, 2024 and 2023, the Company held $82 million and $218 million, respectively, of municipal debt securities that were guaranteed by third parties, representing less than 1% and 1% of total investments at December 31, 2024 and 2023, respectively.
At December 31, 2025 and 2024, the Company held $46 million and $82 million, respectively, of municipal debt securities that were guaranteed by third parties, representing less than 1% of total investments at both December 31, 2025 and 2024.
Investments The Company’s investment portfolio supported the following products at December 31, 2024 and 2023: In millions 2024 2023 Experience-rated products $ 652 $ 723 Remaining products 30,689 25,555 Total investments $ 31,341 $ 26,278 Investment risks associated with experience-rated products generally do not impact the Company’s operating results.
Investments The Company’s investment portfolio supported the following products at December 31, 2025 and 2024: In millions 2025 2024 Experience-rated products $ 578 $ 652 Remaining products 34,236 30,689 Total investments $ 34,814 $ 31,341 Investment risks associated with experience-rated products generally do not impact the Company’s operating results.
Removed
If the value of the Company’s publicly traded domestic equity securities held within its investment portfolio were to decline by 15%, this would result in a net decline in fair value of $43 million ($54 million pretax).

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